The Corn Crunch

Ethanol promises to reduce our dependence on foreign oil and cut greenhouse gas emissions. But turning food into fuel brings unintended consequences.

By David Hunt

Labor Department statistics released in August revealed what most shoppers had already figured out: the price of milk, eggs and other staples have jumped by double digit percentages in the past year. Ironically, one of the nation's most popular alternative energy sources – ethanol – shares some of the blame for the price hikes.

The reason is simple even if the solution isn't.

Ethanol is produced mainly from corn in the U.S. – a lot of corn. Last year about 20 percent of the nation's corn crop was turned into ethanol, and that percentage is likely to rise significantly in future years as the demand for ethanol increases, fueled by federal legislation that mandates big jumps in the production of alternative energy.

The impact on corn prices is significant.

Less than two years ago a bushel of corn sold for about $2; today it sells for about $3.50. That's great for corn producers but not so great for consumers. Since corn is used to feed livestock, increases in corn prices are passed along to consumers in the form of higher prices for a wide range of food products, from the milk in your coffee to the pork chops on your grill.

Products made from corn, such as the sweetener in soft drinks, are also getting more expensive. According to the U.S. Department of Agriculture, the net cost of corn sweetener rose by 35 percent between October of last year and June of 2007.

And as growers cut back on other crops to make room for more corn production, consumers may see the cost of soybeans, oats, wheat and barley go up as well.

"We've known for a while that corn-based ethanol is not a wise allocation of our scarce resources," says Dr. Roger von Haefen, assistant professor of agriculture and resource economics at NC State University.

And it may not be sustainable. If corn-based ethanol alone were used to meet President Bush's proposal to produce 35 billion gallons of renewable fuel by 2017, it would take more corn than the U.S. currently grows.

That's not the only problem with ethanol, says von Haefen.

He notes that ethanol is expensive to produce and transport, and doesn't burn as efficiently as gasoline.

"A considerable amount of greenhouse gas-generating energy is used to produce corn and convert it to ethanol," von Haefen says. "Additionally, the use of nitrogen fertilizers on corn fields often leads to nitrous oxide emissions, a particularly potent greenhouse gas."

In testimony before the Senate Agriculture Committee in January, Keith Collins, chief economist for the USDA, downplayed ethanol's potential to meet the nation's energy needs. "Even with higher corn yields," he said, "corn ethanol alone cannot greatly reduce U.S. crude oil imports."

Increasing the production of biofuels will be "a long-term and complex effort," he added.

Links

U.S. Department of Energy – Biomass Energy