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Ethanol Promoters Speak Out On Food vs. Fuel Debate

posted on May 2, 2008


Hello, I'm Mark Pearson. Government reports this week revealed the U.S. avoided a recession in the first three months of 2008, but just barely.

According to the Commerce Department, the overall economy, as measured by gross domestic product, actually rose 0.6 percent in the first quarter of 2008. But that wasn't enough for members of the Federal Reserve who cut a key interest rate this week for the seventh time in the past eight months. The Fed's move comes despite a government report revealing consumer spending rose by 0.4 percent in March. That's double the increase many economists had predicted.

Normally, increased consumer spending is a positive sign for the U.S. economy, but many experts believe the latest figures say more about rising prices than consumer sentiment. And with consumers spending more these days for everything from groceries to gasoline, critics of ethanol claim increased demand for corn is to blame for rising prices at the supermarket. This week though, proponents of biofuels cleared the air on higher food prices...

Ethanol Promoters Speak Out On Food vs. Fuel Debate The single drum-beat by global think tanks of blaming biofuels for high food prices has begun to change. Being added to the tune are additional factors like increased demand for meat by countries like India and China, poor yields due to inclement weather, and increased petroleum prices. But the criticism has yet to cease.

Tired of taking the condemnation without having their voice heard, supporters of the biofuels industry held a press conference this week to tell their side of the story.

Bob Dinneen, Renewable Fuels Association: "The crisis the world is facing today be it food, economic or environmental, all have a common denominator, the ever tightening world oil market. We cannot afford to jettison the promise of biofuels because of the manufactured hysteria of a phony food versus fuel debate."

Nevertheless, scientists at the International Food Policy Research Institute, or I-F-P-R-I, continue to pursue biofuels as one of the major causes of high food prices. This week they began pushing for a moratorium on biofuels production. According to a recent I-F-P-R-I study, if corn-based ethanol production were stopped today the price of corn would drop by 20 percent and the price of wheat would fall by 10 percent. I-F-P-R-I scientists are not dead-set against biofuels but would prefer they be made from alternative non-grain crops like switchgrass.

More immediately, the UN -- which is planning to establish a task force to find the cause of rising food prices -- will infuse $755 million into the World Food Programme to make up the shortfall caused by the same high food prices.

The increased cost of food has brought increased profits for major players in the food industry. Archer-Daniels-Midland, the global leader in grain processing, saw earnings in the 1st quarter jump 42 percent to $517 million. Despite the increase, the processing giant's corn division, which includes ethanol production, lost $79 million due to high grain and energy prices.

Support of biofuels continues to come from the Bush Administration as part of their plan to end dependence on foreign oil.

President George W. Bush: "And the truth of the matter is it's in our national interests that our farmers grow energy, as opposed to us purchasing energy from parts of the world that are unstable or may not like us."


Tags: biofuels ethanol food news renewable fuels