USDA corn report ‘last nail in the coffin’ of food-versus-fuel fight — biofuel group

Source: John McArdle, E&E reporter • Posted: Tuesday, August 13, 2013

Ethanol advocates are pointing to a newly released Department of Agriculture report on U.S. corn production to rebut claims that the federal renewable fuel standard will contribute to an increase in food prices.

Today’s “World Agricultural Supply and Demand Estimates” report projects that the United States will produce 13.76 billion bushels of corn in 2013. Although that estimate was revised down slightly from one earlier this summer, it would still mean a 28 percent production increase from last year, and it would be 5 percent higher than the previous record.

The report also projects that U.S. corn growers will produce 154.4 bushels per acre, the third-highest yield on record.

“America’s farmers have again risen to the challenge of producing abundant feed, food, and fuel for consumers around the world,” Bob Dinneen, president and CEO of the Renewable Fuels Association, said in a statement after the report was released. “While it is important to remember the crop is not yet in the bins, today’s report should be the last nail in the coffin of the ridiculous ‘food versus fuel’ argument. Corn stocks are likely to hit an 8-year high and prices are at a 3-year low.”

Earlier this summer, the association released an analysis that showed that food price inflation as measured by the consumer price index has increased at a slower rate since 2007, the year the renewable fuel standard was last revised, than it did in the previous five years. The analysis further found that the RFS has not had an impact on the share of disposable income devoted to food.

In June, USDA’s chief economist testified before a House Energy and Commerce subcommittee that ethanol had only a small role in raising food prices compared with other factors such as energy costs (E&E Daily, June 26).

“USDA is projecting food inflation to average just 2 percent in 2013, down from 2.6 percent in 2012 and well below the historical average of 3 percent,” Dinneen said. “Meat prices are expected to advance just 1.5 percent this year, compared to 3.4 percent last year. All this while ethanol production, demand, and consumption continues to increase. Clearly, the link between the RFS, ethanol, and food prices does not exist.”

But opponents of the renewable fuel standard — including groups in the refining, food and livestock sectors — are pushing Congress to repeal the standard in part because of its impacts on food and feed prices. And those groups have released their own studies backing up their assertions. And earlier today the American Petroleum Institute, which serves as the oil industry’s lobbying arm, unveiled its second television ad in a summer campaign targeting the federal renewable fuel standard that brought up food price inflation (Greenwire, Aug. 12).

“It could even raise food prices, because it diverts crops from food production to ethanol,” an actress says in the latest ad, as she stands at a grocery store checkout counter holding her receipt. “And I’ve had enough financial shocks lately.”