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A recent article in this newspaper reporting research findings that ethanol has a negative impact on food prices came from an exceedingly biased source: the American Meat Institute. The U.S. livestock industry has taken a firm stance against ethanol production. Organizations like the American Meat Institute, the National Cattlemen's Business Association and dairy groups across the country have put the bullseye on the back of ethanol, blaming it for all their rising production costs. Research assaulting ethanol from any of these groups hardly comes from an impartial and balanced source.
We participate in a global economy where an extensive number of complex interrelated factors drive supply and demand of goods. And, ultimately those factors drive the price of those goods and services - in the case of livestock producers, the price of feed grains.
As noted in the article by Terry Francl, senior economist with the American Farm Bureau Federation, heightened crude oil prices, rising world demand and the failing strength of the U.S. dollar are all significant contributors to our high crop and food prices today. These are very real economic factors and to simply blame ethanol production is an overly-simplified approach.
According to a study conducted by John Urbanchuk of LECG, LLC, rising petroleum prices have about twice the impact on consumer food prices as equivalent increases in corn prices. A 33 percent increase in crude oil prices - the equivalent of $1.00 per gallon - would increase retail food prices measured by the Consumer Price Index for food by 0.6 to 0.9 percent. An equivalent increase in corn prices - about $1.00 per bushel - would increase consumer food prices only 0.3 percent.
Ethanol is a significant step in the right direction for the U.S. to gain fuel independence. In 2007, U.S. corn growers produced the largest crop in 60 years, over 90 million acres to be more precise. And in doing so, they once again met every market demand of their crop, including food, exports and energy.
Right here in Nebraska, growers are producing record amounts of corn. According to the USDA, Nebraska growers raised 1.472 billion bushels on more than 9 million acres in 2007. Also in 2007, Nebraska doubled its ethanol production with the completion of several new ethanol plants. Ultimately, Nebraskan corn growers are contributing greatly to feeding and fueling the nation.
When evaluating the value of ethanol and its impact on issues like food prices, weigh all the facts. Alarmist attitudes do not serve the public well if America continues to be dependent on Mideast oil. The status quo is not in America's best interests when we are in search of realistic solutions to our dependence on a dwindling supply of energy. Ethanol is one part of the solution and it's a movement that we can all rally around.
Toni Nuernberg, Executive Director of the Ethanol Promotion and Information Council (EPIC). Based in Omaha, Nebraska, EPIC is a nonprofit alliance of ethanol industry leaders who have come together to establish and grow ethanol's place in the global renewable energies market.
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