Corn Ethanol: The Fuel to Higher Food Prices



I have been saying that food prices will go up this year and we have only seen the beginning. I am not being a pessimistic person, but American citizens have to wake up to what ethanol production is doing to our food prices.We are not looking at the old saying: Pay me now or pay me later but we are paying dearly now and we will pay even more dearly later. Biofuels will continue to cause higher food prices.

What is the value of diverting food crops for fuel? That was the question asked when the livestock and grocery lobby vehemently opposed a U.S. energy bill last fall and said that their costs will continue to escalate because of the heavy support for corn ethanol in Congress.

A fifth of the nation’s corn crop is now used to brew ethanol for motor fuel, and as farmers have planted more corn, they have cut acreage of other crops, particularly soybeans. End result cooking oil shortage and wheat shortages.

Corn prices are costing the ethanol producers, who are struggling to make every penny they can, as corn’s record-setting price increases outpaces the price of ethanol, currently at around $2.50 a gallon.. Also, with oil prices hovering around $115.00/barrel, the end result can only mean that ethanol prices will increase. How will this offset the cost of gasoline as ethanol was intended to do? Tell me how this will happen.

Gee, even the ethanol producers will continue to lose money if corn prices remain high or go higher. Since the government pays the kickback to the producers, the American consumer will continue to pay through the nose on all retail markets. The small upstart ethanol producers will be hammered and only the mega producers like ADM will survive the higher costs. Construction of new ethanol producing plants came to a screeching halt at the end of 2007.

What is happening to corn prices? If corn prices go over $5.00/bushel, then the case for corn ethanol is not a viable alternate fuel source. Corn supplies are tight and will get tighter as the year progresses. Corn prices have risen about 30% already this year as corn stockpiles are being deleted and the pressure for more grain tonnage continues. Due to these factors, ethanol prices will continue to rise. Farmers are planting less corn this year. Why are the farmers planting less corn this year? Just how much is a farmer making when you compare his income with ADM (the largest ethanol producer in the U.S.)?

The making of corn ethanol was supposed to help us with our fuel woes, but this has only exposed the environment and our country to other serious issues that have to be addressed. Are we going to eat or produce a subsidized fuel that will only make the situation worse over the long haul? I am totally committed to saving the planet, but at what cost? Folks, this is really happening. The subsidies must be deleted from the production of corn ethanol. Ethanol must stand the test of time to prove its ability to be a sustainable alternative fuel.

10 Responses to Corn Ethanol: The Fuel to Higher Food Prices

  1. Wayne Smallman April 23, 2008 at 8:58 am #

    To some extent, bio-fuels are like electric cars; they’re a false economy.

    For now, that’s true. But I’ve been reading good things about the refinement process (genetically engineered bacteria) as well as GM crops, which is contentious in its own right.

    What’s stressing bio-fuel as a viable fuel source is that we’re leaving it pretty late. We should have been looking at such things 20 years ago, so that transition from fossil to bio would have been more smooth.

    In time, we’ll get this right, but for now, it’s not really us in Europe and the US that’s going to suffer, but those that are already suffering, such as Africa…

  2. April 25, 2008 at 11:13 am #

    @Wayne Smallman: thnaks for the comments.
    You are correct. Unfortunately, people are suffering due to grain shortages and countries hoarding their food supplies. Corn ethanol has been pushed on the American public for many reasons money and greed, but not because it can help out lowering the price of gasoline.

  3. donna gilliam May 1, 2008 at 8:35 pm #

    I am probably going to show my ignorance on this subject by asking this question, but here goes: Why can’t the farmers be paid more to produce soybeans and wheat, and would this help?

  4. May 4, 2008 at 5:46 pm #

    @Donna Gilliam: Thanks for your comments and question. The reason the farmers have gone to growing all corn for ethanol is the subsidites being paid for corn ethanol. It is simple economics. Growing corn pays more to the farmers than soybeans and wheat crops. With corn prices going over $5 and 6.00 per bushel, the other crops have been delegated to the back of the pack. The subsidities for corn needs to be dropped. The U.S. government in all their wisdom did not see what would happen to food prices when they signed off on paying kickbacks for corn ethanol.

  5. Disbelief June 16, 2008 at 9:42 pm #

    From a blog on this website: “and yet the U.S.D.A. says food prices have only been affected slightly by corn ethanol and bio-fuels.” The corn that is used for ethanol is different than that used to feed human beings.

  6. June 17, 2008 at 9:20 am #

    @Disbelief: Appreciate your comments. I have heard this argument many times, but if you are growing ethanol corn 100%, then what happens to the supply of corn that is consumed by humans and fed to animals as feed? What about soy beans and wheat? If farmers are planting ethanol corn, who is going to take up the slack for the food products we need?
    Are you paying less for your food this year? Do you think food prices are going to go down as oil prices rise?
    I guess our brilliant USDA will make a statement next week about food prices only slightly effected as the 2008 corn and soy bean crops in the mid-west have been flooded and mostly destroyed.

    * A World Bank study estimated that corn prices “rose by over 60% from 2005-07, largely because of the U.S. ethanol program” combined with market forces.
    * An Iowa State University analysis of Chicago Board of Trade data found that implied volatility of corn prices had reached 35% by February 2008, up from 32% in 2007, nearly 29% in 2006 and 22% from 1997 to 2005. The gains were attributed in the Iowa State study to “increased demand for corn from the ethanol industry.”
    * The International Monetary Fund estimated recently that the shift of crops out of the food supply to produce biofuels accounted for almost half the recent increases in global food prices. The IMF estimates that global food prices rose 43% in the 12 months ending in March 2008.
    Our government chose the wrong white horse to ride using corn ethanol as an alternative fuel source. Disbelief, take a look at our current draft about “Flooding and HIgh Corn Prices” and check out the link about corn ethanol that I recommend everyone read. The USDA, like the rest of our government is in a black hole. After all the flooding with corn selling for over $7.00 per bushel (all time high), will the USDA say food prices have only been slightly affected? I will be in total disbelief. What about you?

  7. February 8, 2009 at 2:25 pm #

    @AllDeaf.Com: Thank you for your comments. I would have never found your site if you had not contacted Chemically Green.

    Jillio and Banjo, you are exactly right. There are good things that will come out of the green movement. Chemically Green was started to point out alternative views and let people know when their money is being wasted for green programs that are just plain lies and green washing.

    Be sure to check out my upcoming post on the Stimulant Spending Package being proposed by Congress. No earmarks, but full of pork. You and I will be paying for years on a spending bill that probably will not rescue the American economy. Why? Because the housing foreclosure situation and the massive debt of the banks still has not been dealt with. Until these situations are resolved, our economy will continue to struggle and may get worse.

    Al Gore does not represent the people, he represents a movement that is trying to scare everyone into believing that global warming will be the death of us all if the countries don’t spend trillions of dollars to reduce Co2 levels in the atmosphere and man is causing global warming. The American tax payer will pay dearly for these programs with little results. Watch out for the CAP AND TRADE BILL that will be coming up for a vote in Congress. Another scam.

    Also, ethanol has been a political scam from the start. Check out the CG post on The Inconvenient Truth About Ethanol. Keep up the good work and don’t be fooled by all the green hype that is the buzz words for today. Green is good, but Al Gore has done his country and the world a disservice with his Global Warming Lies.

    Please contact me on the CG contact form and I will be glad to share with you about green issues.

  8. steve April 25, 2011 at 5:08 pm #

    Why is everyone so concerned that by making ethanol from corn then the corn product is then a no longer consumable product? Corn that is used to create ethanol is ground down and the starch is made into sugar which is turned into ethanol. The ground corn is now more nutritious for anilmals and has more digestable fiber and protein. IT STILL GET EATEN!!!!!


  1. Corn Ethanol Creating Famine? - April 23, 2008

    […] Read more Chemically Green » Corn Ethanol: The Fuel to Higher Food Prices […]

  2. Cheney warns of new attacks - Page 6 - - February 7, 2009

    […] Originally Posted by jillio As have I Banjo. But if Gore managed to get a few more people on the green wagon, it certainly hasn’t done any harm, and will no doubt do some small amount of good. It has done harm. One example: People, at Gore’s urging, started switching to ethanol as a fuel source. That meant farmers quit growing food crops and began growing fuel crops. The cost of food went up, and is some areas, people went hungry. Corn Ethanol: The Fuel to Higher Food Prices […]

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