Attack on Corn Ethanol

Now that gas prices are lower and corn prices are down, everyone wants to know why food prices are still higher than they were a year ago. But, the companies and organizations most responsible for the price of food went on the attack again today blaming ethanol, specifically corn ethanol, for the problem.

Calling ethanol the “30 year old still living in the parents’ house,” the “Food Before Fuel” group called for an end to all ethanol subsidies on what they called the 30th anniversary of government incentives to help development of the industry. The focus was totally on corn ethanol, without even a mention of moving into next generation fuels. The group took a few questions from the room, but the phone system must not have been working and no questions were taken from the phone.

Here’s what I wanted to ask National Turkey Federation president Joel Brandenberg, who was the main speaker on behalf of the organization: What if all the restaurants and grocery stores in the country were owned by the beef producers? How would the turkey industry compete? What incentive would they have to sell turkey? That is the situation the ethanol industry has been facing for the past 30 years (even though at least the first 20 shouldn’t count). How long do you think it would take to build up the turkey industry from scratch, teach people how to cook it, get farmers to breed and produce the birds, get processing plants in place, get federal regulations for turkey inspections, etc. You get the picture. This industry has been built literally from the ground up in less than 30 years.

And don’t get me started on the food price issue. They said it will take “18-24 months, assuming no future spike in corn price, to work through the damage that was done this summer,” said Brandenberg. Yet these were the same people who promised that if Texas were granted a waiver of the Renewable Fuels Standard that food prices would drop immediately.

The group claims that the general public agrees with them. Sure, if you tell them that the production of ethanol caused by government policies is driving up the cost of their food prices – of course they are going to agree with you. Problem is, that’s not true and the fact that they are saying the drop in corn prices will take TWO YEARS to work through the system while the increase in corn prices had an immediate affect on food prices proves that it’s not true.

Needless to say, the corn and ethanol industries immediately struck back after the press conference today. “These same ethanol critics are the ones who virtually promised to reduce food prices immediately, and have failed to do so, even though corn prices and energy prices are down by more than half in the last few weeks,” National Corn Growers Association president Bob Dickey said.

The newly-formed ethanol organization Growth Energy held a press conference after the food industry event, calling on them to “come clean about the misinformation that it has been spreading” noting that even though the Grocery Manufacturers Association was not out front in the media event, they are still the “ones that are funding most of the misinformation campaign that we are trying to work on.”

Growth Energy launched a countdown clock this week to track the hours and days elapsed since the group called on GMA and its members to lower prices for consumers at the grocery store in line with drop in the cost of corn and oil, which have decreased significantly. At a press conference last week, Growth Energy challenged GMA to either lower food prices or admit to the fundamentally flawed argument it has been making about biofuels.

I hope to see Congress have a hearing on this issue and pull in the food manufacturers like they pulled in the oil companies to at least rake them over the coals a bit for making big profits at the expense of the consumer and then blaming it on someone else. At least they aren’t lining up for a bail-out – yet.