[B] According to the U.N., world food prices hit a record high in January, meaning food is now more expensive than it has ever been
in real terms since the U.N. first began tracking the numbers in 1990. At a time when much of the global economy is still struggling
to bounce back from the crisis of the past few years, high food prices could push millions back into poverty and cause millions more
to go hungry.
Less clear is what’s actually behind the spike in food prices. Bad weather plays a major role — a devastating heat wave in
Russia last summer ruined grain harvests and prompted that country to suspend exports, jolting global markets. Excessive heat in the
Midwest stunted the corn crop, leading to a 5% drop in production last year. Rising demand for food — especially meat, whose
production requires lots of grain and water — in the richer parts of the developing world is straining supplies. And then there’s
ethanol, the production of which sucks up grain and cropland that could be used for food.
Princeton researcher Tim Searchinger, in a column last week in the Washington Post, argued that biofuels are contributing to the
food crisis. He noted that biofuels — both corn-based ethanol in the U.S. and biodiesel, which depends on palm oil, elsewhere —
now consume more than 6.5% of the world’s grain and 8% of its vegetable oil. That’s up from 2% and virtually nothing in 2004. In a
tight world food market, tightened by bad weather, that diversion of grain and oil makes a difference for food prices, especially in
developing countries where a rise in the price of staples is passed directly to consumers. In developed countries, marketing and
packaging often make up the lion’s share of food value, cushioning consumers from a rise in staple grains. “Today, the market is out
of equilibrium,” Searchinger wrote.
The ethanol industry in the U.S., though, is hitting back against the suggestion that it is pushing up food prices. In a press call on
Friday, Growth Energy CEO Tom Buis complained that a “highly well-funded and highly orchestrated campaign of misinformation”
was overstating the impact of biofuels on food prices. While 4.9 billion bushels of corn may be used for ethanol in the U.S., Buis said
that the industry uses “No. 2 yellow corn” — a strain fed to animals, not humans. Also, some of the corn remains after its distillation
for food. The industry claims that up to 2 billion bushels of that original quantity can be recovered and used for animal feed, blunting
the impact on food prices. “Ethanol today is 10% of our nation’s fuel consumption,” said Buis. “If it went away, you would have to
find more petroleum to replace that, and you’d see fuel prices go up.”
No one is arguing that biofuels are solely responsible for driving up food prices. Rising demand and bad weather play significant
roles — droughts, heat waves and floods could become more common in the future as the climate warms. Speculators who buy up
food futures as investments contribute to price volatility, too, though it can be tough to trace their exact role. But it’s clear that in a
tighter market, diverting corn and other crops to biofuels will only act to raise prices. That might be worth it if biofuels provided
substantial environmental and economic benefits, but there’s significant research showing that corn ethanol's carbon footprint isn’t
much better than that of oil. Nor has ethanol done much to wean the U.S. off foreign oil — replacing 90% of our oil consumption
with ethanol would require four times more corn than American farmers produce in total. The world will have 219,000 more mouths
to feed tomorrow, and another 219,000 the next day. We’d be wise to use our food for food, not for fuel.