Leaked food price report pushes ethanol debate

The University has done controversial studies on ethanol in the past, but a World Bank report leaked in early July pressed the debate even further.

The report, leaked to "The Guardian," a British newspaper , said that production of biofuels , such as corn ethanol, have forced global food prices up 75 percent. The United States is the world's top corn exporter , and Minnesota was the nation's fourth-highest corn producer in 2007. More here...

High Oil Prices? Blame Ethanol, OPEC Says

Ethanol is on the ropes because of the food versus fuel debate, but now a new heavyweight just stepped into the ring and this one has got some really big guns.

OPEC president Chakib Khelil has a new culprit for the rising cost of oil–ethanol. Mr. Khelil says about 40% of the recent rise in oil prices can be chalked up to ethanol, which accounts for about 1% of the world’s transportation fuel. The other 60%, apparently, is due to a weak dollar and “geopolitical worries.” The problem: OPEC’s boss doesn’t lay out the logic explaining why ethanol blended into gasoline is to blame for high oil prices. More from the WSJ...

OECD report says massive biofuel subsidies not helping to cut greenhouse gases

BRUSSELS, Belgium: Massive government subsidies for biofuels are not helping to reduce greenhouse gas emissions, according to an OECD report released Wednesday.

The U.S., EU and Canada spent €11 billion (US$17.6 billion) in public money to support energy crops in 2006 — and will more than double that over the next 10 years, according to estimates by the Paris-based Organization for Economic Cooperation and Development. More here...

Wholesale prices soar in June; Sales are sluggish

WASHINGTON (AP) -- The economy showed the depth of its twin problems on Tuesday, slow growth and rising inflation, as the nation wrestled with a teetering financial system, a slumping dollar and rising prices for food and fuel.

The Labor Department reported that soaring costs for gasoline and food pushed inflation at the wholesale level up by a bigger-than-expected 1.8 percent in June, leaving inflation rising over the past year at the fastest pace in more than a quarter-century. More here...

Food prices will continue to rise around the globe

In 1928, Republicans famously promised “a chicken in every pot.” These days, it’s becoming increasingly difficult to promise even an apple for every schoolchild.

And the growing number of poor people around the world will just have to wait in line. More here...

USDA Rule Change May Lead To Crops on Conserved Land

Under pressure from farmers, livestock producers and soaring food prices, the U.S. Department of Agriculture is weighing a policy change that could lead to the plowing of millions of acres of land that had been set aside for conservation.

At issue is the Conservation Reserve Program (CRP), under which the government has paid farmers to stop growing row crops, such as corn and soybeans, on 34 million acres across the country. Designed in the mid-1980s to hold down production and bolster commodity prices, the $1.8 billion-a-year program has turned into a major boon for conservation, with much of the acreage planted with perennial grasses or trees, or restored to wetlands. More here...

Let’s stop subsidising the production and use of bio-fuels

Editorial by Willem Buiter for Financial Times. A recent World Bank report on the causes of the rise in food prices during the past three years confirms the view, widely held outside the Washington DC White House and the French farmers’ lobby, that increased bio-fuel production has made a major contribution to rising food prices. According to Rising Food Prices: Policy Options and World Bank Response, global wheat prices rose by 181 percent over the 3-year period leading up to February 2008 and overall global food prices by 83 percent. Food crop prices are expected to remain high in 2008 and 2009 and then begin to decline. They are likely to remain well above the 2004 levels through 2015 for most food crops. Around 15 percent of the increase in food crop production prices is due directly to higher energy and fertilizer costs.

When will U.S. admit its mistake on ethanol?

From the San Diego Union Tribune. There are few human skills more crucial than being able to recognize a mistake and act to fix it. Whether you're a fifth-grader or a CEO, going into denial when you're mired in failure makes the problem worse.

Unfortunately, we're now witnessing a textbook case of a massive enterprise gone haywire that those responsible abjectly refuse to fix – even as the evidence keeps pouring in to confirm it is a multifaceted disaster. More here...

Biofuel for thought

From Financial Times. You can run a G8 conference on caviar, but not use it as biofuel for your car. One outcome of this week’s meeting of world leaders in Japan should be an end to subsidies for biofuels of uncertain environmental merit but definite harm to some of the world’s poorest people. Subsidising the use of crops as fuel is no substitute for putting a price on carbon emissions. More here.

The Rich World and the Food Crisis

Leaders of the G-8 nations are gathered this week in Toyako, Japan, to root out the culprits in a food crisis that has moved hundreds of millions from subsistence to starvation. They need look no further than an old group photo.

The G-8 countries' interventions have distorted global agricultural markets to the paralysis point. Politicians legislate price supports to enrich farm voters. Lobbies extort tariffs to block cheap food imports and subsidies to underwrite food exports at prices that destroy competitors in poor countries. Conservationists have agitated to set aside productive land and pay farmers not to grow. And now green energy advocates push ethanol quotas and tax credits that divert food into fuel. More here...

Europeans Reconsider Biofuel Goal

BRUSSELS — European officials proposed scaling back drastically on their goal of increasing Europe’s use of biofuels, a major about-face on a central environmental and energy issue.

At the same time, a new report by the British government cast fresh doubt on fuels made from crops as a way to the fight climate change. More here...

Man-Made Hunger

Thirty countries have already seen food riots this year. The ever higher cost of food could push tens of millions of people into abject poverty and starvation.

To a large degree, this crisis is man-made — the result of misguided energy and farm policies. When President Bush and other heads of state of the Group of 8 leading industrial nations meet in Japan this week, they must accept their full share of responsibility and lay out clearly what they will do to address this crisis. More here...

Let’s stop subsidising the production and use of bio-fuels

A recent World Bank report on the causes of the rise in food prices during the past three years confirms the view, widely held outside the Washington DC White House and the French farmers’ lobby, that increased bio-fuel production has made a major contribution to rising food prices. According to Rising Food Prices: Policy Options and World Bank Response, global wheat prices rose by 181 percent over the 3-year period leading up to February 2008 and overall global food prices by 83 percent. Food crop prices are expected to remain high in 2008 and 2009 and then begin to decline. They are likely to remain well above the 2004 levels through 2015 for most food crops. Around 15 percent of the increase in food crop production prices is due directly to higher energy and fertilizer costs. More here...

Heather Draper: Perry picks right side of the ethanol debate

Lately it seems Americans are uttering not one, but two F-words with increasing frequency and emotion.

Food and fuel.

With prices of both soaring, I was glad to see Gov. Rick Perry weigh in on the debate over the federal government’s renewable fuel mandates, which he says are hurting the state’s livestock industries. The rest of the article is here...

Stop requiring ethanol production

From the LA Times... With the price of corn soaring, it's clear that the ethanol mandate is bad economic policy and bad energy policy.

John McCain Interview

ABC News video of a recent John McCain interview.

News Stories...

Weather Risks Cloud Promise of Biofuel

From the New York Times. The record storms and floods that swept through the Midwest last month struck at the heart of America’s corn region, drowning fields and dashing hopes of a bumper crop.

EDITORIAL: Fixing a boondoggle: Pursuing common sense on ethanol

From the Las Vegas Review Journal. On Monday, more than 50 House Republicans asked the Environmental Protection Agency to reduce required ethanol production this year, saying a law requiring a fixed amount of corn liquor be blended into gasoline sold at the pump will boost already high corn prices in the wake of recent Midwestern floods.

Who's Behind High Prices

From The Washington Post. Tired of high gasoline prices and rising food costs? Well, here's a solution. Let's shoot the speculators. A chorus of politicians, including John McCain and Barack Obama, blames these financial slimeballs for piling into commodities markets and pushing prices to artificial and unconscionable levels. Gosh, if only it were that simple. Speculator-bashing is another exercise in scapegoating and grandstanding. Leading politicians either don't understand what's happening or don't want to acknowledge their own complicity.

Food inflation may dodge Midwest flood bullet

DES MOINES, Iowa: Midwest floods may not contribute as much to food inflation as was feared.

Corn prices fell Monday after the government surprised traders, reporting farmers tried to cash in on soaring corn demand for ethanol by planting more acres of the crop than the market expected. The rest of the article is here...

Texas governor trying to slash ethanol production

WASHINGTON (AP) — Texas Gov. Rick Perry, supported by livestock producers concerned about rising feed prices, stepped up his effort Tuesday to pressure the federal government to cut ethanol production requirements in half. More here...

Texas Governor Rick Perry's ethanol stance stirs up backers, foes

From the Dallas Morning News... WASHINGTON – Texas Gov. Rick Perry has touched off a new battle over America's use of corn-based ethanol, dividing the powerful agricultural lobby and forcing regulators to grapple with the fuel's impact on food prices.

Food price spike: Is ethanol to blame?

From CNNMoney.com. A devastated corn crop is likely to exacerbate costs at the grocer. Some people are pointing a finger at the ethanol production laws.

Addressing the Global Food Crisis

From The Heritage Foundation... A number of factors have contributed to these price increases. Ethanol and other biofuel mandates have created a competition between food and fuel, which in turn has helped to drive up food prices.

Corzine asked to seek ethanol waiver

With food prices soaring in the face of a federal mandate to increase production of corn-based ethanol, food producers and retailers today called on Gov. Jon Corzine to seek a waiver from the ethanol requirement.
"Families in Camden now face the choice between filling up their gas tanks or feeding their families," said Kelly D. Johnston, vice president of government affairs for Campbell Soup Company. More...

It's wing chains vs. peanut farmers in ethanol fight

Chicken-wing restaurants and egg producers have joined other food companies singed by high corn prices in lobbying for a partial roll-back of the national Renewable Fuels Standard, which mandates the use of biofuels. More here...

Butterball cites ethanol policy in local job cuts

From the Rocky Mountain News. Butterball LLC said it will cut more than 200 jobs in Colorado this summer in response to the rising cost of turkey feed and government policies that promote corn- based ethanol as a fuel alternative.

Governor Perry Press Coverage

Fort Worth Star Telegram

Sioux Falls Argus Leader

Austin American Statesman

Austin Business Journal

CNBC Interview

CNN Interview

Repeal ethanol mandates to ease global food shortage

Editorial from the Detroit News.

The only benefit that may come from the widespread flooding in the nation's Midwestern grain belt is that it could provide political cover for washing away the federal government's destructive ethanol mandates.

As much as 4.4 percent of this year's corn crop, or 3.3 million acres, is expected to be lost to the floods covering the central farm states.

Even before the heavy rains, the U.S. Department of Agriculture was predicting food prices would rise 5 percent in 2008.

Floods give more fuel to critics of ethanol

Already under siege from many sides, the U.S. ethanol industry is facing further pressures as recent Midwest flooding pushes corn prices to new highs and federal regulators weigh calls to reduce required use of the fuel.

One of the people calling for that is Gov. Rick Perry, who has scheduled a news conference on the subject today in Washington. Fearing the effects of high corn prices on the state's cattle and poultry industries, he has called on the federal government to suspend or reduce its mandate setting minimum levels of ethanol in the nation's fuel supply.

Complete article is here.

Record corn prices mean more expensive meat, dairy

NEW YORK (AP) -- Raging Midwest floodwaters that swallowed crops and sent corn and soybean prices soaring are about to give consumers more grief at the grocery store.

In the latest bout of food inflation, beef, pork, poultry and even eggs, cheese and milk are expected to get more expensive as livestock owners go out of business or are forced to slaughter more cattle, hogs, turkeys and chickens to cope with rocketing costs for corn-based animal feed.

More here...

US food producers urge ethanol rethink

From the Financial Times... US meat, dairy and poultry producers yesterday urged regulators to re-examine ethanol mandates, which are tightening limited grain supplies and forcing a run-up in feedstock prices that threatens their livelihoods.

"We are facing tighter and tighter supplies of grain that threaten to devastate meat, dairy and poultry producers and cause food price increases for the American consumer,'' said Thomas Elam, president of FarmEcon, an agricultural and food industry consulting firm. "The government must not allow this to happen.''

Ethanol policy boosts food costs, study finds

From Missouri's Columbia Tribune... A new study by the University of Missouri’s Food and Agriculture Policy Research Institute shows that in biofuels, federal policy is the puppet master with power to manipulate the economy with market interventions such as subsidies, tariffs and mandates.

Editorial: Reconsider mandates

From the Milwaukee Journal Sentinel...

The sentiment behind government mandates for corn-based ethanol is understandable, but mandates are contributing to soaring food prices.

Midwest flood may cover nation in higher food prices

From the LA Times. The flood tides enveloping the Midwest will crest across the nation in the form of higher prices in just the places where households have been hit the hardest -- food and fuel.

Video...

MSNBC video on the floods and rising food prices.

Ethanol under fire

Floodwaters aren't just damaging corn. They're washing away support for corn-based ethanol.

As corn prices keep setting records — another came Thursday — the beleaguered ethanol industry faces more critics shouting, "Enough!" Investors raced for the exits, too, as analysts Thursday warned of losses and urged dumping shares in ethanol makers.

"In the last 10 days, the world has changed in the corn market with massive flooding causing irreparable damage to this year's corn crop," said Citicorp analyst David Driscoll.

Biofuels Are Indefensible in Our Hungry World

The world's agriculture and water crisis is only going to get worse. As China and India grow, their populations are demanding more and wider varieties of food stuffs, and competition for arable land is intensifying. Food prices are rising, in large part because agriculture suppliers can barely keep up with today's demand. So what is the world doing? Reorienting land away from food production and toward plants cultivated for energy needs.

Here is the link to the full article.

Federal Ethanol Policies Cause Severe Harm to Virginia’s Economy

HARRISONBURG, VA – June 11, 2008 – A study commissioned by Virginia Poultry Federation (VPF) shows that federal mandates and subsidies for corn-based ethanol are having a harmful impact on Virginia’s economy.

The study, by noted agricultural economist Dr. Thomas Elam, estimates that a federal tax credit of $0.51 per gallon and a nationwide mandate to add nine billion gallons of ethanol to motor gasoline during 2008 will cause a net loss to Virginia’s economy of $863 million this year. The study attributes the economic losses to increased production costs for livestock and poultry producers and higher food costs for consumers.

CNBC Interview with Presidential candidate John McCain

Shares of Pacific Ethanol plummeted almost 6 percent in trading Wednesday, a day after the U.S. Department of Agriculture reported a lower-than-expected corn harvest and Republican presidential candidate John McCain said the federal government should end ethanol subsidies.

Here is the link to the interview.

Lift ethanol tariff, save a dime

Any idea intended to lower gasoline prices never fails to attract attention, but seldom does it garner anything near unanimous support.

Lifting the tariff on imported ethanol was the lone idea in a recent CNNMoney.com story about how to lower gas prices that had support from a variety of energy experts - a consumer rights advocate, an energy trader, and an academic.

Here is the link to the full article.

True Cost of Biofuels

Fox News recently ran this great piece on the food-to-fuel debate, called “True Cost of Biofuels”.

Area Immigrants Sending Food to Home Countries

As the United Nations met in Rome last week to discuss shortages and high prices of food and international charities scramble to help the nations hardest-hit by the global food crisis, some immigrants in the United States are providing their own version of food aid. They are paying to have provisions delivered to hungry relatives at home.

Here is the link to the full article.

The Food Chain: Worries Mount as Farmers Push for Big Harvest

An article in today’s New York Times regarding this year’s global harvest and increasing concerns that it will be below average. The article mentioned that the Department of Agriculture estimated on Monday that one plant in 10 has not emerged from the ground mostly because many states in the Midwest like Iowa and Indiana, have been experiencing constant rain and the land has become waterlogged. USDA Chief Economist Joseph Glauber commented that “if we have bad crops, it’s going to be a wild ride. There’s just no cushion. The article also noted that due to the rain in the Midwest, the price of corn on the commodity markets rose Monday to a record $6.57 a bushel. University of Illinois professor Emerson D. Nafziger said “We can’t snap our fingers and make high yields. We still depend on the weather.” The articled also cited harvest problems around the globe including the drought in Australia, expected torrential rains in China, and the soaring costs of farming in the Philippines.

Here is the link to the full article.

New York Times Editorial: Politics and Hunger

An editorial from today's New York Times on the global food summit that occurred last week. The editorial criticized that domestic politics of more-developed nations trumped "both humanitarian concerns and sound strategic calculations." at the summit. It also mentioned the factors of the food crisis, including the "misguided mandates and subsidies in the United States and Europe to produce energy from crops." It called for an end to the "fat" subsidies that the richest nations' provide to farmers and noted that "these subsidies depressed food prices for years and discouraged investment in agriculture across much of the developing world. In a world of growing demand and far too much hunger, they have no justification at all."

Here is the link to the full article.

Wall Street Journal Op-ed: How to Continue the Fight Against Hunger

An op-ed from today’s Wall Street Journal penned by Norman Borlaug, Nobel Peace Prize Laureate and professor of international agriculture at Texas A&M, and Peter McPherson, president of the National Association of State Universities and Land-Grant Colleges and former administrator of the U.S. Agency for International Development (USAID). The op-ed discussed the global food crisis and possible solutions, and called for a “long-term vision of growth, and integrated investments that incorporates research, human and institutional capacity building, infrastructure, sound policy, markets and governance.” They wrote that the USAID must help countries produce more food and reestablish their reputation as leading the donor world on agriculture. They proposed that the USAID should invest more in agriculture and work with U.S. universities in the area of solving hunger. They concluded that “Food, agriculture and growth must once again become fundamental and sustained USAID objectives. Let's heed the words of George Marshall and focus our resources on hunger, poverty and desperation.”

Here is the link to the full article.

UN summit: corn on table or in tank?

Corn on your table or in your tank? The merits of increasing biofuel production in the middle of a crisis over skyrocketing food prices was being hotly debated at a United Nations summit, but the top U.S. delegate said Wednesday that consensus on the issue was possible.

Here is the link to the full article.

Op-Ed: Energy Lessons

NY Times Op Ed piece by Roger Cohen. Corn is food. Turning it into fuel, which is costly and energy-intensive, removes nourishment from the global food supply. Subsidizing corn-ethanol production in Iowa also diverts land from soy, another important staple.

Here is the link to the full article.

U.N. Says Food Plan Could Cost $30 Billion a Year

From the New York Times. Faced with an immediate hunger crisis and the need to double food production in the next 30 years, world leaders meeting Tuesday to discuss soaring food prices were mostly in agreement on how the problem could be resolved. The questions were how to get there and who was going to pay for it.

Here is the link to the full article.

Bioenergy: Fuelling the food crisis?

From the BBC. The biofuel debate is electrifying the UN food price crisis summit in Rome, pitting nations against each other and risking transforming bioenergy - once hailed as the ultimate green fuel - into the villain of the piece, the root cause behind global food price spikes.

Here is the link to the full article.

Is corn boom expanding Gulf of Mexico's 'dead zone'?

From the Minneapolis Star Tribune, Some fear an ethanol-fueled harvest in the Midwest may be behind the hard times for marine life at the other end of the Mississippi River.

Here is the link to the full article.

Food Summit Heads for Biofuels Clash

Biofuel subsidies came under attack on Tuesday at the opening of the United Nations food summit in Rome as the head of the UN’s Food and Agriculture Organisation claimed that “nobody” understood the diversion of food to fuel cars.

The opening salvo is likely to set the tone for the next three days and put countries such as the US and Brazil, the world’s largest biofuel producers, and also the European Union, on the defensive over their support of biofuel production.

Here is the link to the full article.