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Biofuels do have an impact on grain prices and a more modest impact on food prices. The most recent estimates I've heard are that biofuel production increased the price of corn by about 20 percent over the last 12 months and food prices by about 1.2 percent.
Knowing these figures to be accurate, I had to wonder why biofuels were being pegged as the cause of a global rice shortage and record increases in food prices. I found out the reason this week. A group of food manufacturers hired a Washington, D.C.-based public relations firm to conduct an aggressive campaign to mislead all of us into believing that biofuels are to blame. The goal was to get Congress to roll back the amount of renewable fuels required to be in the supply chain.
The truth is that raw agricultural products account for less than 20 percent of the price of food. Prices we pay at the store are impacted most by marketing, labor and energy costs. We all know what has happened to the price of gas, so it should come as no surprise that our food costs more, too. Then there is a weakened dollar and increased worldwide demand for more and better food by a growing middle class. At the same time, world grain production dropped last year simply because of bad weather.
A Merrill Lynch commodity strategist recently said gasoline prices would be 15 percent higher if biofuel production didn't exist. If fuel prices impact food prices to the extent economists say they do, imagine how much higher food prices would be without biofuels.
Adrian J. Polansky
Kansas Secretary of Agriculture
109 SW 9th Street
Topeka, KS 66612
(785) 296-3556
May 16, 2008
Contact:
Lisa Taylor
Director of Communications
Kansas Department of Agriculture
(785) 296-2653
ltaylor@kda.state.ks.us
OP-ED: Biofuels and the Price of Food
It's no secret I'm an advocate of biofuels. I have been for a long time, so I'm fairly accustomed to the anti-biofuel rhetoric. Even so, I was taken aback by the level of blame being heaped on biofuels this spring for rising food prices.Biofuels do have an impact on grain prices and a more modest impact on food prices. The most recent estimates I've heard are that biofuel production increased the price of corn by about 20 percent over the last 12 months and food prices by about 1.2 percent.
Knowing these figures to be accurate, I had to wonder why biofuels were being pegged as the cause of a global rice shortage and record increases in food prices. I found out the reason this week. A group of food manufacturers hired a Washington, D.C.-based public relations firm to conduct an aggressive campaign to mislead all of us into believing that biofuels are to blame. The goal was to get Congress to roll back the amount of renewable fuels required to be in the supply chain.
The truth is that raw agricultural products account for less than 20 percent of the price of food. Prices we pay at the store are impacted most by marketing, labor and energy costs. We all know what has happened to the price of gas, so it should come as no surprise that our food costs more, too. Then there is a weakened dollar and increased worldwide demand for more and better food by a growing middle class. At the same time, world grain production dropped last year simply because of bad weather.
A Merrill Lynch commodity strategist recently said gasoline prices would be 15 percent higher if biofuel production didn't exist. If fuel prices impact food prices to the extent economists say they do, imagine how much higher food prices would be without biofuels.
Adrian J. Polansky
Kansas Secretary of Agriculture
109 SW 9th Street
Topeka, KS 66612
(785) 296-3556