Minnesota Farmers Union

(April 21, 2011) - The current high prices and projections of low carry-over stocks have rekindled the food vs. fuel debate. Certainly the ethanol industry, directly, and corn farmers, indirectly, will face increasing calls for lowering the renewable fuels mandate and a reduction in or elimination of the blenders tax credit. If there are planting problems this spring or weather/pollination problems this summer, the pressure for change will intensify.

As we listen to this debate, the implied assumption is that the sole purpose of farming is to provide food and certainly that has been true for over half a century. But if we look back at the nineteenth century, a different more complicated picture confronts us. At that time most farms had a woodlot that provided firewood for the farm household and maybe some to sell to townspeople.

In addition, the farm had a significant amount of its land dedicated to pastureland to provide food—energy—for the animals that were used to pull the implements used in farming and to pull the buggies, wagons, and sleighs that were used to go to town, school, and church. The draft animals were also fed oats and hay that was grown on the farm. Even the addition of steam tractors did little to change this structure as they were usually fueled with firewood.

(June 5, 2009) - Grain and livestock producers are not the only ones affected by the increase in crop prices that began in September 2006; urban consumers have been affected as well, or at least indices of food price changes would suggest so. Between September 2007 and September 2008-just after crop prices hit their peak-the retail cost of cereals and bakery products for urban consumers increased by 12.3 percent. Between January 2000 and December 2005 the year on year price increase for cereals and bakery products averaged a little over 2 percent.

As prices peaked, some conceptualized the issues as one of food vs. fuel as much of the consumer price increase was attributed to the increased demand for corn as the basic component of ethanol production. The ethanol demand for corn increased by nearly 100 percent between the 2005 and 2007 crop years while corn prices increased by 149 percent. It is easy to understand why ethanol was identified as the underlying culprit of the jump in food prices.

But the increase in food price is much more complex than just an "ethanol did it" story. In fact, not even the corn price increase itself is simply an ethanol-did-it story. Let's first take a brief look at the run up in corn prices before discussing the food price issue.