Food and fuel
Feeling a pinch at the pump and in the grocery cart? The demand for corn to produce biofuels is a boon for Iowa's economy, but is hitting our pocketbooks. The Washington Post says "Corn price increases flow like gravy down the food chain, to grocery stores and menus. Beef prices are up. So are the costs of milk, cereal, eggs, chicken and pork."
"What we've done with the usage of biofuels -- based on corn -- is link our food prices to energy prices," said Michael Swanson, an agricultural economist for Wells Fargo. "And now you can either sell corn for feeding animals or for fueling vehicles." (Chicago Sun Times).
The problems caused by the linkage of food and fuel prices are not going to go away soon. According a recent government report almost a third of the U.S. corn crop will be used to produce fuel ethanol in five years, possibly raising animal feed costs for farmers and meat prices for consumers (Reuters).
Economists argue that market forces will stimulate production with increasing demand. Indeed, U.S. corn producers planted 90.5 million acres of corn this spring - the highest acreage planted in 63 years (Farm Industry News).
The bright side of all this is that the bioenergy industry is fueling growth in Iowa's economy, contributing more than $8 billion to the gross state product last year, according to the Iowa Renewable Fuels Association. The less bright side is that food and fuel costs will increase the burden on everyone, particularly for marginalized populations in this nation and developing counties.
In this period of prosperity in bioenergy, we should try to make everyone a winner.
