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Independent Studies Dispute Big Foodís Most Recent Claims Against Ethanol

Groups representing Big Food manufacturers recently published two reports claiming that increasing the ethanol blend rate will raise grain and food prices. Two independent studies, however, conclude otherwise. Recent studies show that ethanol’s use of corn makes less than one percentage point difference in the retail price of food, and that increasing the ethanol blend would only have four cents’ impact on the price of a bushel of corn.

“Follow the money and consider the facts when critics make these claims that ethanol is responsible for food price hikes,” said Brian Jennings, Executive Vice President of the American Coalition for Ethanol.

A June 9 Reuters story outlined the anti-ethanol reports, commissioned by the Grocery Manufacturers Association and the National Turkey Federation and featured prominently on the “Food Before Fuel” website.

“These two new misleading reports, one paid for by Big Food and the other paid for by a group representing turkey meat processors, are making yet another attempt to convince the public that ethanol is the reason food prices should be high, this time in the context of the possible approval of E15,” Jennings said. “The context is different, but the facts remain the same: food processor margins have more to do with retail food prices than retail food prices than ethanol, corn, market speculation, or even rising oil prices.”

Two independent studies on this subject conclude something very different than these paid-for reports:

The Congressional Budget Office issued a report in April (“The Impact of Ethanol Use on Food Prices and Greenhouse Gas Emissions”) which found that from April 2007 to April 2008, ethanol’s use of corn contributed only five-tenths to eight-tenths of one percentage point to the increase in food prices. The CBO report noted that energy prices had three times the impact on food prices than corn prices did.

The Food and Agriculture Policy Research Institute (FAPRI) at the University of Missouri determined in a report issued last month (“Impacts of Selected U.S. Ethanol Policy Options”) that the approval of a 15 percent ethanol blend would increase corn prices by just 4 cents per bushel, and that moving to E15 would result in a zero percent change in consumer food expenditures.

The full text of both studies can be read or downloaded at Ethanol.org.

The truth about food and fuel:

· Ethanol’s use of corn contributed only five-tenths to eight-tenths of one percentage point to the increase in food prices from April 2007 to April 2008.

· Energy prices had 3 times the impact on food prices than corn prices did.

(Source: Congressional Budget Office)

· The approval of a 15% ethanol blend would increase corn prices by just four cents per bushel

· Moving to E15 would result in a zero percent change in consumer food expenditures.

(Source: Food and Agriculture Policy Research Institute)}}

 
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The American Coalition for Ethanol publishes Ethanol Today magazine each month to cover the biofuels industryís hot topics, including cellulosic ethanol, E85, corn ethanol, food versus fuel, ethanolís carbon footprint, E10, E15, and mid-range ethanol blends.
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