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Debating the impact of biofuels on food, other prices

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Debating the impact of biofuels on food, other prices
Worthington Minnesota 300 11th Street / P.O. Box 639 56187

REDWOOD FALLS -- Emotions are rising nationally as leaders debate the question about whether biofuels such as ethanol are driving up food and other prices.

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Those at FarmFest Wednesday heard national and state experts deliver a definitive "it depends" answer to the question that is gaining more and more attention.

Ethanol can be blamed for just a small portion of soaring food and transportation prices, but problems may lie ahead, the experts' panels told hundreds attending the state's largest agricultural trade show.

Randy Spronk, an Edgerton farmer and National Pork Producers Association board member, said corn-based ethanol is the main driver for some products' higher costs: "A box of cereal is going to be a lot less affected than my pork chop."

The controversy is about whether ethanol demands so much corn these days that it drives up the costs of other products that use corn, such as livestock. Corn opponents also claim thousands of acres of cropland that otherwise would be planted with other crops are growing corn now because farmers can earn more.

Spronk's livestock advocacy did not reach the level of rhetoric heard in Washington from corn opponents. FarmFest debate on the topic was "Minnesota nice."

Minnesota Agriculture Commissioner Gene Hugoson tried to find a middle ground between livestock and grain farmers.

"We have to have it all," said the commissioner, who has served for three governors, adding that both grain and livestock farmers are vital to the state's economy.

Economists have not been able to agree on how much ethanol is to blame for higher prices.

"It has gone from an economic discussion to what I think is a pretty emotional issue," said Texas cattle producer and Farm Bureau livestock economist Jim Sartwelle.

Commodities ranging from concrete to steel to food all have increased in price, University of Minnesota economist Brian Buhr added. Much of the blame can be placed on rising energy prices, he said.

"The word of the day is volatility," Buhr said.

Sartwelle predicted that volatility will last another six years, until new federal energy laws are fully implemented and ethanol researchers have had time to develop a fuel made from grass and other plants, relieving the pressure on corn.

In the meantime, Spronk predicted, the supply of corn for his hogs will run out.

"Our concern as pork producers is the availability of corn for animal feed," he said.

While not opposed to ethanol -- something he uses as a farmer -- Spronk said livestock producers are at a disadvantage because federal and state laws now favor using corn for fuel compared to livestock feed. Federal policy "has distorted the corn market," he said.

"Will we have enough corn to produce food and how will these consumers spend their limited food dollars?" he asked.

No one on either of two panels at FarmFest could guarantee that the corn will be available for livestock.

Thirty-four percent more corn is being used for ethanol production this year than last.

Sitting next to Spronk in one panel discussion was Hector farmer Steve Kramer, secretary of the Minnesota Corn Growers Association. He said ethanol use is a relatively small factor in price increases.

"The marketplace will balance out," Kramer predicted. "There is no shortage of food caused by the diversion of corn."

Many on the two panels blamed high oil prices more than ethanol production for rising costs. Kramer, for instance, said the average food product is transported 1,500 miles before it reaches the table.

Tom Buis, National Farmers Union president, said farmers have to work together on the issue or crop and livestock farmers both may be hurt.

He rattled off a list of companies that blamed ethanol for their need to raise prices, including beer and toothpaste manufacturers.

"If we allow our critics to define us ... then I say shame on us," Buis said. "If we don't stand up and fight back, they will define us."

The chance to provide fuel needs to be implemented, he said.

"I have not seen such a great opportunity for rural America in my lifetime," the Indiana farmer told the Minnesota audience.

Big oil companies, in particular, are fighting ethanol. They don't fear corn-based ethanol, Buis said, because it is made in relatively low volumes. However, he added, the next step, when ethanol is made from abundant grass, is more of a threat.

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Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.
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