Notable Quotes

Texas oilman T. Boone Pickens, who once scoffed at ethanol, recently told the CNBC financial news network that he now supports increased production of the homegrown, renewable fuel. Pickens cited the $1 billion a day that America spends on imported oil.
A recent study by Creighton University economist Ernie Goss found that the ethanol industry and higher ag commodity prices have boosted the Midwest economy while much of the country faces an impending recession.

The production and use of ethanol strengthens Nebraska’s economy while lowering fuel costs. Ethanol blended fuels saved Nebraska consumers more than $70 million during 2007.  Francisco Blanch, a commodities expert for Merrill Lynch, said that biofuels like ethanol lower gas prices by at least 15% on a nationwide basis. 

Ethanol contributes to increased food prices, but it is a minor factor, a Nebraska economist said Friday.  During a five-year period ending in February, ethanol was responsible for food prices rising by no more than 2 percent while total U.S. food prices went up about 16 percent, University of Nebraska-Lincoln economist Richard Perrin said at the monthly meeting of the Nebraska Ethanol Board.  "Obviously, ethanol is a contributor," Perrin said, "but it's obvious that it's not a very big contributor."  All grains make up about 3 percent of total food costs, he said. If all grain prices doubled, food prices would go up about 3 percent.
                                                   
Secretary of Agriculture Ed Shafer                               
“Certainly, that [use of corn for ethanol] is a factor as we are seeing the rising food costs out there,” U.S.  Agriculture Secretary Ed Schafer told CNBC. “It's not the factor, however. Energy is the big issue as we look at those food prices,” he added.

Secretary Schafer said only about 25 percent of the corn crop goes to make  ethanol and that the forces driving rising prices in corn and other commodities has more to do with energy costs, increased consumption around the world and weather-related  production problems. Critics who blame high food prices on US policies they claim encourage corn to be diverted from food and      
 livestock feed to alternative fuels are "flat out wrong," said Schafer.                                                                                                     

Secretary of State Condeleeza Rice                               
"We have an energy and a food problem. There are some relationships between them," Rice told the House of  Representatives Armed Services Committee.  "We also think a significant part of the food problem relates not from biofuels but from simply the costs of energy in terms of fertilizer and in terms of transportation costs for food," she added.        
                                                                      
August Schumacher, a former under secretary of agriculture      
 “…the criticism of biofuels might be misdirected.  Development agencies like the World Bank and many governments did little to support agricultural  development in the last two decades,” he said.  He noted that many of the upheavals over food prices abroad have concerned rice and wheat, neither of which is used as a biofuel. For both those crops, global demand has soared at the same time that droughts suppressed the output from farms.                         

 Former Secretary of Agriculture John Block                      
“The cost of raising a crop has jumped by perhaps 40%.  That’s mostly driven by the cost of energy.”                
 
“…the primary driving force pushing up food prices is global demand for meat.  To produce meat, it takes grain.  Market forces are setting prices and no on can do much about it.”  (audio file)      
              
Brazilian President Luiz Inacio Lula da Silva                   
"Don't tell me, for the love of God, that food is expensive because of biodiesel. Food is expensive because the world wasn't prepared to see millions of Chinese, Indians, Africans, Brazilians and Latin Americans eat,” Lula told reporters. "We want to discuss this not with passion but rationality and not from the European point of view,” he added.                        

Richard K. Perrin, Professor of Economics at the University of   Nebraska-Lincoln                                                 
“This simple breakdown of values tells us that rising corn prices will not contribute much to higher food prices – a 40 percent increase in corn price will ultimately be passed on as a 40 percent increase in just 3.2 percent of the cost of food – a final food cost increase of about 1.3 percent.”                           
    
Texas A&M University
According to an April 10 study by its economists, 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.  

The report also concludes that relaxing the RFS would not  result in significantly lower corn prices. This is due to the ethanol infrastructure already in place and the generally positive economics for the industry. The ethanol industry has grown in excess of the RFS, indicating that relaxing the standard would not cause a contraction in the industry.     

Economist John Urbanchuk, June 2007

“A 33 percent increase in crude oil prices – which translates into a $1.00 per gallon increase in the price of conventional regular gasoline – results in a 0.6 percent to 0.9 percent increase in the CPI for food while an equivalent increase in corn prices ($1.00 per bushel) would cause the CPI for food to increase only 0.3 percent.”

Kansas City Federal Reserve Bank, January 2008

“Marketing costs drive retail food prices. 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.”

 U.S. Department of Agriculture, 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.”
 
“Given that foods using corn as an ingredient make up less than a third of retail food spending, overall retail food prices would rise less than 1 percentage point per year above the normal rate of food price inflation when corn prices increase by 50 percent. Even this increase may be partially tempered by changes to corn use in food production.”
 
Agricultural and Food Policy Center, Texas A&M University, April 2008

“The underlying force driving changes in the agricultural industry, along with the economy as a whole, is overall higher energy costs.”

“Relaxing the RFS does not result in significantly lower corn prices. This is due to the ethanol infrastructure already in place and the generally positive economics for the industry.”

“This research supports the hypothesis that corn prices have had little to do with rising food costs.”

Emphasis needs to be on oil-exporting nations Thai Prime Minister Samak Sundaravej:                 
Prime Minister Samak lashed out at the World Bank and the United Nations for criticising biofuel producing nations for soaring food prices while sparing oil exporters.”     
                                              
“Let me ask the World Bank whether they used to ask oil exporting countries before pointing their fingers and blaming us that  we have to use rice fields to grow biofuel crops,” Samak told reporters.   

“They have unreasonably continued to inflate oil prices even though the oil supply is not running out  yet,” he added.             
                                                                           
 Livestock gobbling up grain supply German Environment Minister Sigmar Gabriel:             
 Gabriel downplayed their role in raising food prices, saying demand for animal feed was more        
 relevant.                   
                                                                           
"There are other factors crucial for rising food prices. The big competition is not between the use of biomass for energy and food but between feed and food," he said.                    
                                                                           
Ethanol not the primary reason for higher food prices Brent Searle, Special Assistant to the Director of the Oregon Department of Agriculture.

Whatever else one may criticize about corn ethanol, or biofuels in general, they are not the   
 primary cause of recent food price increases. Consider the fact that growers planted 24 percent  more corn in 2007, which more than supplied all the corn that went into ethanol for the year.  One could, therefore, totally remove corn ethanol from the equation and most of the present food price issues would still would be present because there are many moer factors at play with food prices here and abroad.                                                                                
                          
Biofuel debate shows ‘gross  misunderstanding’ about food markets Potash Corp. CEO Bill Doyle  (Potash is the world’s largest fertilizer  company):  
                
 “I think that ethanol is the most popular whipping boy in the agricultural world at the moment,” Doyle told analysts on a conference call on Thursday. Doyle, who has talked about declining world grain  stocks for years, noted 95 percent of the world's grain crop this year will be used for food.           
                                                                           
“So to say that biofuels are the culprit clearly underestimates the demand and really shows a gross misunderstanding of the world food situation,” Doyle said.              
                                                                           
Ignoring oil prices is ‘shockingly misinformed’ Rick Wagoner, Chairman and CEO of  General Motors Corp.: says claims that biofuels are driving up food prices are  
“shockingly misinformed.”  
                                                                           
 “If you look at what’s causing higher [food] prices, the cost of corn is  a very small part of that,” 
  Mr. Wagoner said over the weekend at the Beijing auto show. “Oil prices are a far bigger driver of higher food prices than ethanol.”  

“Don’t underestimate the ability of U.S. and global agriculture to respond to higher prices.”
—USDA Chief Economist Keith Collins

 “…as you look at the effect of molecular breeding, instead of getting that one bushel-per-acre rate of gain each year, you get two or three. As you look at the biotechnology traits, particularly drought and fertilizer efficiency, we think that it’s possible to see those national averages push 250 to 300 bushels per acre.”
—Robb Fraley, Monsanto vice president and chief technology officer

“The development of new technologies, combined with yield improvements, point to the opportunity to produce more food and more fuel—and not just in this country but throughout the world.”
—Patricia Woertz, chairman and CEO of Archer-Daniels-Midland

“Feeding wet distillers grains saves us 25 cents per day per cow. We won’t switch our grain ration for a nickel or dime, but a quarter savings is big. I believe it’s the best byproduct feed to come along. And we’ve tried them all.”
—Missouri Dairy Farmer Mark Chamberlin

 “Our concern has been ‘Will there be enough feed?’ Assuming all the distiller’s grains are available for livestock feed, clearly there will be.”
—Dr. Jim MacDonald, Texas A & M Experiment Station beef cattle nutritionist