Corn Commentary

It was inevitable that when Agriculture Secretary Mike Johanns spoke at the National Press Club on July 27 someone would ask about ethanol. The transcript says it all:

QUESTION: Corn-based ethanol may help the nation reduce its dependence on foreign oil, but critics say that ethanol costs almost as much as the energy it produces. Isn’t corn-based ethanol a wasteful way to produce energy, and won’t it increase the cost of food?

SEC. JOHANNS: No, and it isn’t.
[Laughter.]

We studied that a lot at the USDA, and years ago when the plants were not as efficient, when ethanol was barely used in our country, there were a lot of articles about the inefficiency of producing ethanol and all the energy, etcetera. We’ve debunked that in our studies. We’ve put that issue to rest. Independent studies have looked at the same issue. You very definitely have efficiency here.

The other thing I will tell you, in the United States we’re going to grow corn. We just simply are. We do it very well; we do it better than any country in the world, and our farmers are going to grow corn. And I think it’s important that we do everything we can to create a marketplace.

Let me offer a thought, and we’re talking about maybe an address that really gets down to this issue of food versus fuel. Every year we have some inflation relative to food, 2 percent, 3 percent, somewhere in that vicinity, some years maybe a little bit more, a little bit less. This year with all of this debate raging we anticipate that food prices across the board will be impacted 2 to 4 percent, about average, maybe a little bit higher. Then when you look at that, many articles I read see that and then they go right to the conclusion, it’s because of ethanol, it’s because the price of corn got high and that’s the reason.

They leave out a whole big piece of the analysis. What’s the big piece of the analysis? The farmer doesn’t get all of that. I’m sure they wish they did. But they get about 20 cents of the retail dollar. Actually the increase in the price of energy to ship that food can have as much or more of a profound impact on the price of that food than the corn you feed to the animal.

I’m just telling you, this is a very, very complicated supply chain. And if you have reached the conclusion that because food is up 3 percent this year or 4 or 2 or whatever it is, that that’s because of ethanol, and you’ve missed all of that, you’re not telling the full story. And you’re not telling an accurate story, in all due respect.

We have the accurate story at the USDA. We study this all the time. We buy or provide money for nutrition programs, so of course we want to know what the price of food is doing. And anybody who wants to write an in-depth article on that or do a series on it, we’d love to provide you with the information on just how complex the food chain is and how impacts in that food chain relative to fuel to transport it, or to promotion costs or whatever it is, can actually have a more important impact on the cost of that food than the price of bushel of corn.

You go, Jo!
Link to USDA transcript