Ethanol: A Burden on the Poor

The red-hot Congressional love affair with the alternative fuel ethanol is starting to leave many supermarket customers feeling mighty blue these days as they pay inflated prices for grocery staples.

Even worse, it’s likely to dramatically increase the cases of chronic hunger, malnutrition and starvation in the poverty-stricken nations of Africa and Southeast Asia in the months ahead.

With the prices of some food staples soaring upwards of 40 percent as more farmers plant corn for ethanol rather than human food and animal feed, many environmental groups are raising the specter of global food shortages of apocalyptic proportions.

“We are witnessing the beginning of one of the great tragedies of history,” said Lester R. Brown, president of the Earth Policy Institute and author of a new report on ethanol and its effect on food prices.

The increased amount of acreage devoted to growing corn for ethanol, he observed, means the U.S. will ultimately export less grain – further harming poor nations that rely heavily on food imports for their basic sustenance.

Brown projected that the 800-million human beings currently living in hunger will rise to 1.2 billion by 2025.  “The United States, in a misguided effort to reduce its oil insecurity by converting grain into fuel for cars, is generating global food insecurity on a scale never seen before,” he said.

“As a result, the world is facing the most severe food price inflation in history as grain and soybean prices climb to all-time highs,” Brown said, noting that wheat trading on the Chicago Board of Trade on December 17 pushed past the $10 per bushel for the first time ever, while a bushel of soybeans traded at a historic high of $13.42 on January 11.  The rising commodity prices are driven by hefty federal subsidies for U.S.-produced ethanol and huge tariffs of some $1.50 per gallon on cheaper ethanol imports from Brazil.

The subsidies and tariffs have triggered a rush to invest in America’s new biofuel industry.  Dozens of new ethanol plants are popping up across the agricultural states of the Midwest like mushrooms after a spring rain.

A region that once produced much of Americans’ food and sent its surpluses to feed the world’s hungry now is producing grain for automotive fuel — the beneficiary of earmarks from the Capitol Hill friends of prairie farmers.

Ironically, ethanol delivers an energy punch about 30 percent lower than standard gasoline, so motorists will find their overall gas mileage plummeting even as they shell out more money.

That doesn’t trouble Midwestern corn farmers, many of whom have doubled their incomes as the government-induced demand for ethanol has sent corn prices rocketing upward over the past few years.

Yet the House members and senators funding this boondoggle still insist it is an alternative green fuel that helps the nation’s motor vehicle fleet spew less of the carbon dioxide that scientists say creates the greenhouse gasses that contribute to global warming.

Well, maybe not.  Ethanol is so corrosive that it cannot be transported by pipelines and must be hauled overland in tanker-trucks.

Since the bulk of the ethanol is produced in the heartland and consumed on both coasts, the carbon dioxide emitted by tanker-trucks leaves a carbon footprint which criss-crosses the U.S. tens of thousands of times a day.

Those massive clouds of pollution have caught the attention of far more radical environmental groups that the relatively conservative Earth Policy Institute.

In late January, representatives of the Rainforest Action Network (RAN), Student Trade Justice Campaign and Food First met in front of House Speaker Nancy Pelosi’s San Francisco office to demand a moratorium of all federal incentives for ethanol and other biofuels.

Michael Brune, RAN’s executive director, noted that politicians are misguided when they paint biofuels as “the fuels of the future.”  Such fuels, he said, shouldn’t emit more greenhouse gases than gasoline, degrade priceless eco-systems and force poor people off their land.  He noted that giant agribusinesses like ADM and Cargill are clearing tropical rain forests in Indonesia and New Guinea to grow biofuels for export to advanced countries.

Given the huge campaign contributions to federal lawmakers from biofuel companies, his words almost surely will fall on deaf ears when they reach Capitol Hill.

David A. Ridenour is vice president of the National Center for Public Policy Research.

The National Center for Public Policy Research is a communications and research foundation supportive of a strong national defense and dedicated to providing free market solutions to today’s public policy problems. We believe that the principles of a free market, individual liberty and personal responsibility provide the greatest hope for meeting the challenges facing America in the 21st century.