Farmers, ethanol firms blame oil for food costs

30 April 2008 21:38  [Source: ICIS news]

WASHINGTON (ICIS news)--US farmers and corn ethanol producers said on Wednesday that record crude prices and rising global demand have caused increasing food costs and that blame directed at biofuels is a misinformation campaign.

 

John Block, former US secretary of agriculture in the Reagan administration and a long-time corn farmer in Illinois, said that ethanol-driven demand for corn has contributed to increasing food costs but in a very minor way.

 

He said that main drivers of increasing food costs worldwide include growing food demand in developing countries, droughts that have hurt grain crops globally, commodities speculators, the weak US dollar, grain export restrictions among some Asian producing nations and opposition to genetically modified grains that produce greater yields.

 

“Food demand is escalating in China, India and other developing countries where people want more animal protein instead of just rice and wheat,” Block told a press conference.

 

“The droughts in Australia and elsewhere have hampered wheat production, and when stock prices fall on Wall Street as they have this past year and more, speculators invariably turn to commodities such as food grains,” he said.

 

“There is a lot happening out there than just the minor influence of biofuels, and it is unreasonable to blame biofuels for a major part in this,” he said.

 

Rick Tolman, chief executive of the National Corn Growers Association (NCGA), blamed a “clever misinformation campaign that is trying to turn Bo Peep into an axe murderer”.

 

He pointed out that corn grown for ethanol is a different variety than that farmed for food, and that US corn exports have grown in recent years, indicating there is no price-driving shortage of the grain.

 

Tolman also noted that US corn crop yields have doubled in the last 40 years and are likely to double again over the next two decades, meaning there will be enough corn for fuel and food production.

 

The rash of negative media and institutional reports about corn ethanol, he said, “are part of a clever misinformation campaign”.

 

“If you want to know the source of this misinformation, look at $4/gal gasoline and $120/bbl oil,” Tolman said.  He suggested that oil producers and refiners have encouraged negative reports on biofuels to direct attention away from huge energy cost increases, especially in poorer countries that rely chiefly on oil imports.

 

Bob Dinneen, president of ethanol trade group Renewable Fuels Association (RFA), also cited sharp price increases for oil, gasoline and diesel fuel along with a surge in global food demand, the weak dollar and speculators as the real culprits in food price increases.

 

He also blamed European nations and some African countries for government policies banning genetically modified grains technology that could improve crop yields on both continents.

 

Block said that a positive side to rising food prices worldwide will be an inevitable increase in agricultural investments globally and an increasing acceptance for genetically modified food grains.

 

Block, Dinneen and Tolman all called for increased US domestic oil and gas exploration and drilling along with alternative and nuclear energy development to help bring down the cost of oil and natural gas.

By: Joe Kamalick
+1 713 525 2653

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly