Farm Groups Address 'Hype' Surrounding Ethanol

Leaders talk about the facts and dispel myths.

Published on: May 29, 2008

Leaders of several farm organizations came together to address recent hype in the news about the role biofuels plays in the cost of food and a misinformation public relations campaign being funded by the Grocery Manufacturers Association.

American Farm Bureau President Bob Stallman opened the news call with the fact that when the Renewable Fuel Standard is fully implemented 10% of the nation's gasoline supply will be from biofuels. When considering that 14% of the fuel supply in 2007 was imported from OPEC that is very substantial.

"The RFS lowers our current gas prices by as much as 15% saving consumers roughly 50 cents a gallon right now," Stallman says. "Production of 6.5 billion gallons in 2007 displayed the need for 228 million barrels of oil. That is equivalent to nearly half the oil imported from Venezuela in 2007. We never said and the experts have never said that ethanol would replace petroleum, but it is important and brings us one step closer to cellulosic biofuels and that means greater energy independence for the future."

Bob Dinneen, President of the Renewable Fuels Association spoke about the many factors influencing the price of food today ranging from weather related events in wheat growing areas to speculation in the marketplace, but singled out oil.

"The single most important factor driving inflation, all inflation not just food inflation is oil," Dinneen says. "We're looking at $125 a barrel oil today. That is clearly having a devastating impact on our nation's economy and is driving food price inflation across the globe. You can't grow $2.50 corn on $4.50 diesel."

David Cleavinger, the president of the National Association of Wheat Growers, and Tim Lust, the CEO of the National Sorghum Producers echoed that sentiment talking about the rising cost of inputs. Cleavinger says his fuel and fertilizer prices have skyrocketed this year, while wheat prices have dropped.

"My president-elect gave me some numbers off his farm this week," Lust says. "In terms of diesel now at $4.19 a gallon, a 200% increase in two years; herbicides, about a 300% increase a tripling in price from last year. Urea fertilizer is now being quoted over $1000 a ton, about a 300% increase from last year. You very quickly see that just cost of production has increased substantially, and we're now in levels where we are not going to be where food prices were historically in this country due to the impact oil has had."

National Farmers Union President Tom Buis discussed several myths about corn ethanol that the mainstream media have embraced that are completely false, such as ethanol being to blame for a tortilla chip shortage in Mexico last year, the cost of popcorn prices at the movies, and even the cost of beer.

"I'm tired of debating these myths," Buis says. "We'll be glad to have a serious policy debate on the facts, but let's base it on facts. We need to move ahead, the last thing we need to do on renewable energy is backslide again, or 30 years from now we'll be back debating our dependence on imported energy."

Recently some states such as Texas have requested a waiver of the mandate for the use of renewable fuels. According to Dinneen analysis shows that if the waiver was granted it would have a devastating impact on gas prices, with prices skyrocketing by $1.10 a gallon.

"The causes of food price inflation are very many and the role of ethanol is miniscule when compared to all the others," Dinneen says. "And the flip side of it: the positive impacts that ethanol is having reducing gasoline prices, and crude oil prices and energy across the globe are very real and need to be considered as people evaluate these programs."