Biofuel Production is Increasing Food Prices

We need to find cleaner fuels, but biofuel production - particularly ethanol fuel - may be doing more harm than good.

corn prices graph

Increased demand for corn has raised the price. Data courtesy of TradingCharts.com. (Future prices in dollars per bushel.)

Graph by Nate Skow

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Biofuels, particularly ethanol fuel, have had plenty of recent hype as a possible homegrown replacement for gasoline. However, biofuel production in the United States is driving up grain prices and possibly harming the environment.

A recent report from the Earth Policy Institute says that grain used for alternative fuel sources in the United States alone exploded from 54 million tons in 2006 to 81 million tons in 2007. This doubled the annual growth in world demand for grain. The report also says that world grain production has failed to meet demand in seven of the last eight years, and using grain in biofuel production is increasing this deficit. Some countries have even restricted or banned grain exports to avoid further rises in domestic food prices. The resulting “agflation” has created record prices for corn, soybeans and wheat.

The Union of Concerned Scientists adds that when you consider the energy-intensive inputs that go into some methods of growing corn (such as tilling, increased land use, and fertilizer and herbicide/pesticide use), plus the biofuel production itself, ethanol fuel may not represent a viable long-term solution. 

alan d. smith
9/2/2009 12:23:20 PM

Something is terribly wrong with this picture. Someone is getting screwed, probably Us. Producing ethanol from corn shouldn't increase the price of corn at all. Production of ethanol from corn actually extends the nutrient value of corn by about fifteen percent, because the substrate (corn matter that's left over) has been pre-digested by the process. Livestock consuming this dried substrate can more easily digest it with a net gain of about fifteen percent more protein. Hence, the dried substrate should bring a higher price as feed than raw corn. So, farmers who supply corn to distilleries should contract only rent the corn to the distillery, then to get the substrate back to sell as livestock feed or for extraction of its many other valuable components. Hence, there would be no cost of the base material (corn) to produce the ethanol. In fact, the farmer could make more on the corn while offering it to the market for less. The current situation of "ethanol production raising the cost of corn" makes no sense. Someone is making a quiet killing here.


royce vines
2/13/2009 4:55:01 AM

An I always thought you seppo's were smart. Trying to make ethanol from corn is too ineffient. The Bazilians woke up to this 30 odd years ago and used sugar cane and its waste products. Many other plants, grasses etc. also make better producers that corn. This idea sounds like a sop to the corn farmers lobby. Why won't the U.S. allow Brazil to export some sugar cane ethanol to America? I think they are now running 20 or 25% ethanol/petrol fuel now. I can also advise that no modifications are required to modern cars. In fact G.M. Holden exports Commodores to Brazil with no mods at all. These use the Ecotech V6 and the Gen III V8. Wake up America.