[Bill Lapp] 1. Reduced availability of corn: Based upon Agriculture Department estimates released on May 12, corn supplies will decline to the lowest level (relative to usage) in 14 years. This largely reflects a 35 percent increase in the use of corn for the production of ethanol over the past two years.
2. Battle for acreage: As more corn is needed to meet ethanol demand, acreage devoted to other crops, such as wheat and soybeans, is reduced, leading to higher prices for those crops as well. A hiccup in weather this summer could drive prices significantly higher for corn, wheat or soybeans.
[Michael J. Roberts] For food prices, specifically, a big factor is whether the U.S. sticks with current (and in my view, ill conceived) ethanol policy. My own research suggests that prices of key food commodities — like corn, soybean, wheat and rice — are about 30 percent higher as a result of U.S. corn-based ethanol production.
We’re in a recession. People need to pay less for food. Instead, we have a harebrained fuel policy that pays people to burn corn, which Congress is happy to let lie so that next year we’ll pay more taxpayer money to burn more corn. We need a Bread Party or two to go alongside the Tea Parties.