End the Corn Ethanol Mandate

According to an estimate from the Department of Agriculture, from August of last year to August of 2011 the United States used more corn for ethanol production than it did for animal feed or human consumption:

For every 10 ears of corn that are grown in the United States today, only 2 are consumed directly by humans as food. The remaining 8 are used in almost equal shares for animal feed and for ethanol. And, for the 12 months from August 2011 to 2012, the U.S. biofuels industry used more corn for fuel than domestic farmers did for livestock feed – a first for the industry. This significant milestone in the shifting balance between crops for food versus fuel shows the impact of government subsidies for the biofuels industry. And, it could represent a tipping point in the conflict between food and fuel demand in the future.

And its no surprise that the price of corn has shot through the roof over the past decade, as the government has implemented mandates requiring that billions of gallons of ethanol be produced:

As you can see, the price shot up massively after the year 2002. It isn’t fair to blame ethanol policies for the entirety of the rise in prices over the last decade, but it clearly played some sort of role, as it is increasingly converted to fuel. Rising corn prices in the United States do increase food prices, but its not as big of a burden on U.S. consumers as we live in a wealthy country and food does not account for the majority of the budgets of most of our citizenry. However, in poor countries the story is much different, where rising corn prices can induce much hardship into local economies. This research (PDF) suggests that our policies that promote ethanol are likely causing starvation in foreign countries:

Higher global demand for biofuels, driven mainly by policies in industrialized countries with the stated purpose of enhancing energy independence and retarding climate change, has contributed to rising global food prices. As a consequence, more people in developing countries suffer from both chronic hunger and absolute poverty. Hunger and poverty are major contributors to death and disease in poorer countries. Results derived fromWorld Bank andWorld Health Organization (WHO) studies suggest that for every million people living in absolute poverty in developing countries, there are annually at least 5,270 deaths and 183,000 Disability-Adjusted Life Years (DALYs) lost to disease. Combining these estimates with estimates of the increase in poverty owing to growth in biofuels production over 2004 levels leads to the conclusion that additional biofuel production may have resulted in at least 192,000 excess deaths and 6.7 million additional lost DALYs in 2010.

This should raise an eye or two. Our policies are likely contributing to starvation in the third world. And given the lack of significant benefits from mandated ethanol production, it is time to end federal support for ethanol and make it compete in the marketplace like other fuels. It is likely that without federal support we would use a lot less of it, which is not a bad thing.


Send a Reply