Can Biofuel Development Ease Poverty?

UN conclusion that growing corn for fuel can boost a local economy gives a different take on that food vs. fuel debate.

Published on: May 24, 2011

Last week the United Nations Food and Agriculture Organization issued a report showing that cultivation of crops such as corn for fuel can bring needed investment in agricultural and transportation infrastructure to developing counties. According to the report, the investment could provide opportunities to access export markets, raise incomes, alleviate poverty and increase food security.

In a response to the report, National Corn Growers Association Ethanol Chair Keith Alverson notes that "farmers know that ethanol has a measurable and positive impact on communities, which is greatly needed in today's economy. However it is nice to see more of the world starting to realize what we've been saying and showing for quite some time."

According to a release from NCGA, Heiner Thofern, head of FAO's Bioenergy and Food Security project comments: "FAO has been saying for years that under-investment in agriculture is a problem that seriously handicaps food production in the developing world, and that this, coupled with rural poverty, is the key driver of world hunger."

According to NCGA, the numbers bear out the FAO conclusion. Since 1980, U.S. corn production has nearly doubled from 6.6 billion to 12.5 billion bushels. Distillers grains and other ethanol coproducts will replace over 1.2 billion bushels of corn in livestock rations this year. The U.S. ethanol industry supports nearly 400,000 jobs across all sectors of the economy. In 2010, this increase in economic activity and new jobs supported $53.6 billion of the nation's gross domestic product and put an added $36 billion in the hands of American consumers.

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In addition, considering the amount of imported oil ethanol displaced, also reducing the trade deficit last year, add another $34 billion to ethanol's value to the economy, NCGA notes. Annual operations in the ethanol industry and spending on new construction generated approximately $8.6 billion in tax revenue for the federal government and an additional $4.8 billion in state and local taxes.