Here is a fairly straight forward explanation:
Ethanol's undeserved bad rap
March 04, 2011
I read your editorial "Burning Dinner" and question your implication that farmers are diverting corn toward fuel production that otherwise would be used to feed a hungry world.
First of all, the public should know that the corn grown to make ethanol is not the same type of corn Americans eat directly. The vast fields of corn commonly viewed from any highway, while appearing nearly identical to the "sweet corn" we eat at home, is actually a different crop. The fact is, only about 1 percent of the corn grown in the U.S. is the kind you can cook at home and eat at your table. The rest, 99 percent of the US corn crop is known as "field corn" and is used to either feed livestock here and abroad (its primary demand), "feed" ethanol plants, or processed into food ingredients like corn sugar and corn starch. On a worldwide basis, this "field corn" is but one of several crops used to meet these purposes and the portion diverted to the U.S. ethanol industry ends up accounting for only 3 percent of the world's total grain supply.
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You also state that the tariffs and subsidies need to be reduced and/or eliminated. However, studies show these tariffs and subsidies have little effect on food prices. In fact, a study by the Food and Agricultural Policy Research Institute shows that if all federal ethanol production incentives were removed, and markets given a chance to react to the reduced demand for corn to make ethanol, consumer food expenditures would drop only 0.3 percent. On a $400 monthly grocery bill, that's a savings of $1.20. On the other hand, you correctly point out that eliminating ethanol would drive up gasoline prices by as much as $1.40 per gallon. Where, therefore, is the benefit?
Finally, you argue that "we need to wean our nation from its overdependence on corn-brewed fuel." It would seem to make more sense that we wean ourselves from overdependence on oil from unstable and unfriendly countries.
-- Mike Doherty, Senior Economist, Illinois Farm Bureau
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