External Research

What’s Driving Food Prices?  (Purdue University, July 2008)
Higher oil prices are the predominant factor in higher demand for biofuels and higher corn prices. Three-quarters of the recent increase in the price of corn was attributable to higher oil prices, and one-quarter was tied to the ethanol tax credit.

Analysis of the Effects of Short Corn Crop Scenarios on the Likelihood of Meeting the Renewable Fuel Standard (Texas A&M University Agricultural and Food Policy Center, June 2008)
It appears that if the corn crop is of average size, the RFS would not likely be binding which would not lead to higher ethanol production than can be justified by economics.

Public Support for Ethanol (Renewable Fuels Association, July 2008)
A recent bi-partisan survey shows that by a 2:1 margin, the public supports increased use of ethanol in our nation’s fuel supply. This majority crosses party lines, capturing conservatives and environmentalists alike.

The Effect of Ethanol Production on the U.S. National Corn Price (University of Wisconsin-Madison, April 2008)
Results show that increasing ethanol production has a significant impact on the national average U.S. corn price. The positive price change is consistent with previous research. However, in contrast to what is written in much of the popular press, results do not suggest the extremely high corn prices in spring of 2007 can be completely attributed to ethanol.

Ethanol and Food Prices-Preliminary Assessment (University of Nebraska, Lincoln) Food prices in the United States increased about 16 percent over the last five years, 7 percent over the past 18 months, but rising grain prices have contributed only about a 3 percent cost increase over these periods. It is reasonable to conclude that ethanol is responsible for increases in U.S. food prices about 1 percent in the last two years – a relatively small proportion of actual of U.S. food price increases.

Responding to the Global Food Crisis (White House Council of Economic Advisers, May 2008)
Because corn only represents a small fraction of the IMF Global Food Index, we estimate that the increase in total corn-based ethanol production has pushed up global food prices by about 1.2 percentage points of the 43 percent increase in global food prices, or about 3 percent of the increase over the past twelve months. This estimate includes the indirect effects of the increase in corn-based ethanol production, through crop substitution and spillover effects into other food products.

Meat vs Fuel: Grain Use in the U.S. and China, 1995-2008 (Biofuels Digest, April 2008)
U.S. corn production increased dramatically in the 1995-2007 period, but even more spectacular was the rise in grain demand for Chinese meat consumption. In this context, U.S. ethanol production can be seen as an insignificant sideshow event in terms of impact on grain usage.

Impact of Ethanol on U.S. and Regional Gasoline Prices and on the Profitability of the U.S. Oil Refinery Industry (Iowa State University Center for Agricultural and Rural Development, April 2008)
This analysis suggests that the growth in ethanol production has caused retail gasoline prices to be $0.29 to $0.40 per gallon lower than would otherwise have been the case. The analysis shows that the negative impact of ethanol on gasoline prices varies considerably across regions.

Effects of Ethanol on Texas Food and Feed (Texas A&M University Agricultural and Food Policy Center, April 2008) The underlying force driving changes in the agricultural industry, along with the economy as a whole, is overall higher energy costs, evidenced by $100-per-barrel oil.

Impact of Ethanol on Retail Gasoline Prices in Missouri (John Urbanchuk, LECG, April 2008)
The use of a 10 percent ethanol blend saved Missouri drivers 7.7 cents per gallon at the retail pump in 2007 for a total savings of $158.2 million, or $40 for each of Missouri’s 3.9 million licensed drivers. Reflecting current gasoline and ethanol price movements the savings are expected to average 9.8 cents per gallon or $72.80 per driver this year as 10 percent ethanol is used statewide in 2008.

Corn Prices Near Record High, But What About Food Costs? (USDA Amber Waves, February 2008)
Higher corn prices increase animal feed and ingredient costs for farmers and food manufacturers, but pass through to retail prices at a rate less than 10 percent of the corn price change.

Contribution of the Ethanol Industry to the United States Economy (John Urbanchuk, LECG, February 2008)
This study estimates the contribution of the ethanol industry to the American economy in 2007. Among the benefits, the ethanol industry more than paid for itself in 2007, generating a surplus of $1.2 billion for the Federal treasury, compared to the impact of industry tax credits.

What is Driving Food Price Inflation? (Federal Reserve Bank of Kansas City, January 2008)
Marketing costs have risen sharply over the past 50 years, consuming a greater share of the retail food dollar. In 1950, marketing costs (the difference between the farm value and consumer spending for food at grocery stores and restaurants) accounted for 59 percent of total retail food costs. Over the past three decades, rising labor and energy costs have boosted that share steadily, from 67 percent in the 1970s to 80 percent today.

Analysis of Potential Causes of Food Price Inflation (Informa Economics, November 2007)
There has historically been very little relationship between corn prices and consumer food prices. Statistical relationships are weak even when corn price data are lagged to allow time for them to work their way through the food supply chain. The corn price would be considered a statistically insignificant variable in determining what drives the food CPI.

The Relative Impact of Corn and Energy Prices in the Grocery Aisle (John Urbanchuk, LECG, June 2007)
Critics of renewable fuels are blaming the recent increases on high prices for corn caused by increasing ethanol production. They fail to point out that corn prices are only one of many factors that determine the CPI for food, and in fact, directly affect a small share of retail food prices. Increases in energy prices for example exert a greater impact on food prices than does the price of corn.