May 28, 2010
NCGA: A Voice Of Reason In The Food & Fuel Debate
Published in Cattle Network
Today, NCGA debuts an occasional series of profiles on university researchers and their work in the area of corn and related subjects.
It’s not often an economist interjects a dose of reality into any discussion. However, that was just the case when University of Wisconsin-Madison Professor Randy Fortenbery countered critics placing the blame for a sudden spike in food prices solely on corn. As politicians called for a halt to the expansion of ethanol production, Fortenbery addressed the hysteria with hard facts. Federal statistics showed that farmers were producing more corn for food, feed, fuel and exports — all at the same time.
“If we were really crowding out food, why are we feeding more?” he asked in a news article at the height of the food-versus-fuel debate. “Overlooked in rising food prices is the rising price of crude oil itself. Petroleum is used extensively in mass agriculture, both for fertilizer and for food transportation.”
The United States uses roughly 390 million gallons of gasoline per day for transportation. In 2009, ethanol production utilized about 21 percent of the U.S. corn supply. Fortenbery suggests that “all the U.S. is doing with its ethanol and alternative fuel production is offsetting some of the growth of gasoline consumption.” His research points out that rising corn prices are much more impacted by the value of the dollar and volatility in the market than ethanol production. “When corn went from $8 per bushel down to $3.85, this did not reduce demand on corn for ethanol production; the price of ethanol also fell significantly,” explained Fortenbery. “Ethanol prices do not increase by the price of corn, but the by the price of gasoline.”
