Kansas State economist says media misinterpreting, overstating biofuels impact on food prices

In Kansas, Kansas State economist Mike Woolverton said that mainstream media were misinterpreting work by former USDA chief economist Keith Collins, who recently completed a study for Kraft Foods. “He did say that food prices were impacted,” said Woolverton, “but he said that of the 4.3 percent increase in food prices registered last year, 1.8 percent was due to ethanol production”. Woolverton said that mainstream media had reported that biofuels were responsible for a 30 percent increase in food prices, rather than saying that they were responsible for a 1.8 percent increase, or 30 percent of the total 4.3 percent rise.

Food vs fuel studies and controversy background

The Guardian newspaper in the UK said that it had obtained a copy of an explosive report, which found that biofuels were responsible for a 75 percent increase in food prices, a startling variance from USDA estimates of a 2-3 percent increase and reports funded by food companies showing increases of up to 35 percent. The Guardian said that “Senior development sources believe the report, completed in April, has not been published to avoid embarrassing President George Bush.” The online journal Grist used the report’s appearance for a thoughtful review of recent studies on the impact of biofuels on food prices.

Meanwhile, CNN.com reported on studies sponsored by Kraft Foods and a related coalition of food producers, Balanced Food and Fuel. Both studies projected that a 50 percent reduction in the Renewable Fuel Standard would drop corn prices by $2 per bushel. However a chart on the balancedfoodandfuel.org website projects the corn price at only $3.40 per bushel in 2010, dropping to $3.15 per bushel in 2016.

Meanwile, USDA under secretary Thomas Dorr pledged at the Corn Utilization and Technology Conference to give farmers more support in the food vs fuel debate. Dorr said the Department would highlight that ethanol has caused only 0.25% of the 4.5% increase in food prices and was holding down gas prices.

The EPA comments period in the Renewable Fuel Standard waiver consideration process ended this week. Just before the end of the comments period, the Balanced Food and Fuel coalition (American Meat Institute, National Chicken Council, National Cattlemen’s Beef Association, National Meat Association, National Milk Producers Federation, National Pork Producers Council, National Turkey Federation and United Egg Producers) submitted a paper commissioned from FarmEcon, and Kraft Foods submitted a paper it commissioned from Keith Collins (former chief economist of the USDA), supporting the call for the waiver by highlighting a high impact on corn prices and negligible impact on fuel prices from corn ethanol. The foodbeforefuel.org website funded by the Grocery Manufacturers Association has a link to both studies and is promoting them via press releases.

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