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Ethanol Fact Vacuum

February 11, 2011


When it comes to criticizing American ethanol producers, it seems that facts are far too readily replaced with rhetorical flourishes that are based solely on personal opinion.  The latest salvo from environmental attorney Tim Searchinger is a perfect example.  As Egyptians struggle for democracy, critics on both the far left and right of the political spectrum of American ethanol production are using it as an opportunity to seek attention for their bogus charges that ethanol production steals food from the world's poor.  Such arguments are factually unsupported and are, kindly put, disingenuous. Last week, RFA President and CEO Bob Dinneen took on baseless claims that it was ethanol production that served as the spark for Tunisian, Egyptian, and any other type of unrest happening across the globe today. Dinneen was the first to point out that U.S. ethanol production utilizes just 3% of the world's grain supply on a net basis.  More pointedly, that 3% represents just coarse, or more aptly described, feed grains like corn.  That is significant for two reasons.  First, it means that food grains that are most directly consumed by humans – rice, wheat, etc – are not impacted by ethanol production.  Second, U.S. ethanol production is a major source of livestock feed production for the country and increasingly for the world.  Ethanol production turns one-third of every bushel of corn used into a nutrient-dense livestock feed most frequently in the form of dried distillers grains (DDGs).  In 2010, the U.S. exported nearly 10 million metric tons of feed and still had 23 million metric tons available for domestic feed uses. It is also important to recognize the importance of ethanol production to the adoption of more productive farming technologies.  Yes, ethanol's demand for corn has grown rapidly in the past decade.  So, too, has the supply of corn produced by American farmers.  So much so that the majority of corn now used in ethanol production comes from the efficiency and growth in production.  America is still feeding the same amount of corn to livestock it historically has while keeping exports of international markets constant.  And, we are producing more livestock feed and more renewable fuel. Ethanol does play a role in determining corn price.  No one is suggesting that it doesn't.  Part of the reason for developing a domestic ethanol industry was to provide farmers with more income from the market and less from the federal government.  As such, the Federal Government no longer has to pay countercyclical claims by farmers because corn is priced below the cost of production.  But to suggest ethanol is the driving force behind global food prices – when it uses just 3% of the world's grain supply – would be hard for even the most ardent ethanol antagonist to argue with any intellectual honesty.  Or, one would think. The real factors driving food prices having nothing to do with ethanol production.  A March 2010 report by the United Kingdom's Department for Environment, Food and Rural Affairs found that "Available evidence suggests that biofuels had a relatively small contribution to the 2008 spike in agricultural commodity prices." Even the World Bank, which in 2008 suggested biofuels was playing a large role in higher food prices, released an analysis in July 2010 that found "...the effect of biofuels on food prices has not been as large as originally thought..." and that "...the use of commodities by financial investors may have been partly responsible for the 2007-08 spike." Many in the ethanol community are familiar with Mr. Searchinger, specifically for his rather flamboyant attempt to smear the environmental benefits of biofuel production.  It was February 2008 when Mr. Searchinger first launched his anti-ethanol campaign with the theory of international indirect land use change (ILUC).  This theory suggested that an acre of corn used for ethanol production in the U.S. must be replaced by a new acre brought into agricultural production somewhere in the world.  Mr. Searchinger's default assumption was that it would be an acre of rain forest.  He hypothesized that this conversion of rain forest would result in a "carbon belch" so great that it would make ethanol worse for the environment than gasoline. Since then, every piece of research done on the issue has chipped away at this theory.  The most recent analysis from the Department of Energy's Oak Ridge National Laboratory shows that NO new acres of land were needed to grow corn to meet ethanol demand.  In three short years, Mr. Searchinger's work has been roundly refuted.  Having failed there, he is now on the food versus fuel bandwagon. Ethanol is not the silver bullet to America's energy problems.  It is one part – and important part – of the solution.  Ethanol does have an impact on corn prices, as was part of the goal of a domestic industry.  But, its impact is not as great as suggested by Mr. Searchinger and others, nor is it even the driving factor. It is far easier to be against something than it is to put forward ideas that challenge and change the status quo.  Many critics of biofuels – environmentalists, food industries, livestock producers, Big Oil – fail to put forward any meaningful or implementable alternatives.  A Christmas wish list isn't going to create jobs or make America energy self-reliant.