Ag Secretary Slams Food Industry for Ethanol Attack
Secretary of Agriculture Ed Schafer spoke to the Cellulosic Ethanol Summit Wednesday in Florida and outlined all the advancements being made in biofuels and the potential for the industry in the future. “Nobody is talking about us going backward,” Schafer said, then quickly corrected himself, saying “almost nobody,” noting that the Grocery Manufacturers Association and some others would like to see the industry move backward.
Speaking to members of the media after his speech, Schafer said the group that held a press conference yesterday calling for an end to ethanol subsidies “stood up there with no credibility whatsoever,” when they claimed that it will take 18-24 months for the lower commodity prices to bring food prices back down. “I just think that they are totally off base,” Schafer said. “They are trying to justify the increased cost and increased profits that they’re making at the expense of another industry and that’s just not appropriate.”
Schafer left the summit for Brazil to lead the U.S. delegation at an International Conference on Biofuels in Sao Paulo this week. “Seventy-five countries are going to be there,” Schafer said. “Our effort is to come together between the US and Brazil as the world’s two leading biofuels producers and look at regional and global approaches to bioenergy.”
Schafer also announced at the conference that applications are now being accepted for loan guarantees under the Biorefinery Assistance Program of the 2008 Farm Bill. The Biorefinery Assistance Program is designed to promote the development of new and emerging technologies for the production of advanced biofuels.
You can listen to some of Secretary Schafer’s comments to the press here:
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Jeff Baker
This year, the cost of a bushel of corn doubled, rising along with numerous other commodities being bought and sold by speculators, including wheat, sugar and soybeans. Rice, which has no impact on ethanol production, TRIPLED in price. Some speculators withheld sizable blocks of commodities in order to create artificial shortages, and then they sold at a much higher price. Commodities traders were manipulating supply and driving prices, while critics erroneously blamed corn ethanol for escalating food prices.
When crude oil spiked, the cost of transportation fuels doubled. The cost to ship corn, and foods in general, was a much bigger factor in food prices than the 5 cents per pound that was added to the cost of the corn itself. Ship a ton of corn from Iowa to China and see what happens to the price. The claim that corn ethanol is the main cause for the high price of foods can NOT be substantiated.
Now the price of corn is back down to where it was a year ago, but are food prices dropping? No, because the raw materials in processed foods represent only a small fraction of the huge overhead cost of foods sold in supermarkets.
There is no shortage of corn and no shortage of land to grow it on. We’re using roughly the same amount of land to grow corn that we used 30 years ago, and since then, the yield per acre has more than doubled. After being flat for decades, exports of whole corn increased by 20% this year. Corn farmers would export more if the demand was there. Almost all the corn we export is Not for human consumption. It is Feed Corn. Shipped to foreign countries gaining affluence, like China and India, to produce meat, dairy, and animal products.
Ethanol refineries produce high protein distillers grains. This is animal feed that produces food. Ten to fifteen percent distillers grains added to the feed of dairy cows increases their milk production by 10 lbs per cow per week. It also puts 10% more meat on livestock and enhances the production of many other foods. This year, foreign demand and exports of distillers grains doubled, and its value increased dramatically. Corn ethanol is not just about fuel. It’s also a system for producing food. And when the energy balance is calculated, that must also be taken into account.
Over 80% of the corn crop is Feed Corn. We grow all the corn suitable for human consumption that the world can stand, and we could produce much more. There’s plenty of corn and distillers grains available for sale, if you can afford the shipping cost. The cost of the grain itself is minimal.
The ethanol industry removes the starch from Feed Corn to make fuel. That’s no great loss in the realm of feeding livestock, because cows don’t digest the starch very well anyway. So the industry is taking low value corn starch and converting it into a high value fuel product. And what we have leftover is the more digestible portion of the corn kernel, as animal feed, in the form of high protein distillers grains. Corn oil is another byproduct of ethanol refineries.
Some corn ethanol critics make the false assumption that people are starving, because starch is being extracted to make ethanol from 1 out of 4 bushels of corn. When in reality, the corn ethanol industry makes a superior feed product that produces more meat, dairy, poultry, fish, and pork, in addition to corn oil, and a renewable domestic fuel.
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