Originally Posted By: kschachn
Bunk? Haha, explain to me how the rise in food corn prices isn't a result of crop displacement to the non-food kind you mention. Both compete for the same, limited farm land.
Other commodities besides corn have also risen in price due to displacement.
According to the Department of Energy and the Department of Agriculture, in this memo:
http://www.ethanol.org/pdf/contentmg...tter_61208.pdf
"During the first 4 months of 2008, the all food CPI increased by
4.8 percent, with increased ethanol and biodiesel consumption accounting for only about 4-5 percent of the total increase while other factors accounted for 95-96 percent of the Increase. " ... so what's the other 95+% increase? Looks like food demand, weather, and speculators. Yeah,
speculators.
The same agencies claim "We estimate that, if we had not been blending ethanol into gasoline, gasoline prices would be between 20 cents per gallon to 35 cents per gallon higher." - well, what would a 10% increase in fuel cost do to the price of food that has to be shipped to you? Not to mention, how much less would your customers (whatever industry you're in) buy from you if they had to spend 10% more on their fuel?
It's not taking food off your plate. Speculators are raising prices and a growing population is raising demand.
Yes, all agricultural products inflate each's other' price by displacement. I'm not entirely sure I understand what part of that makes fuel ethanol not OK while floor wax and product packaging and non-bentonite kitty litter (also derived from crops) are OK.
Of those things, if corn based floor wax makes your grocer's building maintenance costs lower vs. another impossible-to-eat alternative source, then the also-corn-based products in that store will cost slightly less.
Likewise if the cost of fuel for the farmer, for the grocer, for the butcher, for the employees of those folks, etc is cheaper, then the prices of everything they sell can also be cheaper.. meanwhile all of the consumers can take the >5% less they're spending on fuel and buy more stuff while they're at it.
So as illustrated above, we spent an estimated 11 billion on fuel corn to save an estimated 34 billion in fuel costs. If you're going to talk about the "inflated cost of corn products" then you need to see the other side of that, the deflated cost of literally every product that relies in any way on internal combustion engines. Including corn itself, which is harvested by internal combustion powered machines and delivered to market similarly. Using figures previously noted above, if the food price index rose ~4% and just 5% of that increase could be blamed on fuel ethanol's impact on the price of corn, then 5% of 4% is 0.2%.
You're seeing about a 0.2% increase in food price index based on corn ethanol.
Likewise from the same memo, if gasoline is $3.80/gallon but *would* be $4.00-$4.15/gallon without ethanol's presence in the fuel market, that's more like a 5+% decrease in fuel price.
Going with simple, front-end dollar amounts, according to Bundle.com we spent around $2200 per household on gasoline in 2009 and we spent around $6500 per household on food.
5% of $2200 is $110 and 0.2% of $6500 is $13.
Based on this quick estimate, we save about 97
net dollars per year per household because of corn derived fuel ethanol at face value.