K-State Ag Today: Ethanol business' effect on food prices is overblown
8:30 a.m. Monday, July 7, 2008
Keith Collins, a former chief economist with the USDA, was recently contracted by Kraft Foods to investigate the impact of biofuels on food and commodity prices.
K-State Research and Extension grain market economist Mike Woolverton says some mainstream media outlets misinterpreted the findings, quoting Collins as saying that ethanol production had driven up food prices by 30 percent.
"He did say that food prices were impacted by ethanol production using so much corn, but he said that of the 4.3 percent increase in food prices registered last year, 1.8 percent was due to ethanol production, which is in line with what the current administration has been saying: '3 percent increase,'" Woolverton said. "And so, yes, ethanol has had an impact on food prices. There will be more impacts to come, but not the great impacts that many people think."
Woolverton is hopeful that when Congress revisits mandated usage standards for ethanol, they won't change too much.
"I think to reduce the mandate or eliminate it would give the wrong message to alternative energy producers. We're going to need alternative energy, in all its forms, not just biofuels, and I think we want to keep that initiative alive," he said.
You can find more information at your local extension office or by logging on to Kansas State's Department of Agricultural Economics Web site.
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