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Biofuels and Bad Weather

America’s Food-to-Fuel Gamble

Monday, June 16, 2008

Biofuels and Bad Weather

America’s Food-to-Fuel Gamble

When the Bush administration and Congress required gasoline refiners to blend in 15 billion gallons of corn-based ethanol by 2015, they made the impossibly rosy assumption that American farmers would always enjoy good weather. But as every farmer knows, years with perfect growing conditions are uncommon and getting more rare.

In early April, Environmental Working Group Founder Ken Cook warned that the government’s food policy amounted to “hope for good weather.” However, hope is not a policy. And it now seems likely that some of the worst weather since the historic 1993 floods will mar the 2008 growing season. With the potential for widespread corn production loss due to this spring’s prolonged cold, heavy rains and flooding in the Corn Belt, and with crop and food prices soaring to new records almost every week, the disastrous cost of Washington’s lack of commonsense is apparent.

Most experts agree that the corn ethanol mandate plays a key role in higher corn and soybean prices and inflated U.S. and global food prices. The Washington ethanol mandate to convert food to fuel, a key provision of the 2005 and 2007 federal energy bills, put the full weight of U.S. policy behind the corn ethanol boom. Add to the equation the extreme weather already inflicted on the Corn Belt, and the likelihood of summer heat and a fall freeze, and an even sharper food and fuel price spiral seems inevitable.

If this scenario plays out, inflation is likely to worsen throughout the foundering U.S. economy. And many experts predict that the pace of food price inflation is likely to quicken in 2009, in line with the ethanol mandate’s climbing food-to-fuel targets.

Congress has only one recourse: re-open the debate on the ethanol mandate.

This week, Ron Litterer, president of the National Corn Growers Association (NCGA) has suggested his organization might support changes in the ethanol mandate if supply shortages cause “severe economic impact.”

This report is the result of extensive interviews with agricultural economists and climatologists in the Corn Belt conducted in Spring 2008, and a May 29, 2008 EWG news briefing1 with four economic and weather experts describing the impact of bad weather on corn production, food prices and the ethanol mandate. The policy views expressed here are EWG's alone and are not the views of the participants in the interviews or the news briefing.

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