Sunday, November 18, 2007

Is ethanol driving up food prices?

One of the criticisms of ethanol is that it drives up corn prices, in turn driving up food prices -- the "food vs. fuel" debate. The implication is that ethanol is immoral because it causes people to go hungry. At the grand opening of an ethanol biorefinery in Shenendoah, Iowa Monte Shaw Addressed this issue. Shaw is the executive director of the Iowa Renewable Fuels Association. He pointed out that corn farmers actually get very little of the money you pay for food items that had corn inputs. He gave a few current examples. The corn farmer, 
he said, gets 6.4 cents from an 8 oz chicken breast, 5.6 cents from a quarter 
pound hamburger, 13 cents from an 8 oz. pork chop, and 3.9 cents from a 
14 ounce box of corn flakes. So what does cause higher food prices these days? The rising cost of crude oil. This impacts the cost of transportation, processing, and packaging. Shaw pointed out one other factor -- record profits reported by some of the major food processing companies. They have been able to make a success of their business models despite higher input costs.
Shaw also addressed the complaint that ethanol production requires uses valuable water supplies. Fortunately, water use per unit of ethanol production has gone down over the years. Now, says Shaw, it takes a little less that 3 gallons of water for every gallon of ethanol. And in facilities such as the one at Shenandoah, municipal gray water is being used--water that would otherwise usually be wasted. Shaw then compared this to water 
requirements for other things. It takes 150 gallons of water, he said, to produce 1 copy of 
the Sunday paper. And 90 gallons of water per gallon of gasoline! Now that really puts the issue in perspective. 

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