Rochester Democrat and Chronicle, NY
08-12-07
In corn should we trust?
Ethanol production may push up prices of milk, chicken, beef as plants pop up in
the area.
Matthew Daneman
Staff writer
The smiling family looked happy enough in the life-size image plastered across
the side of the Ethanol Promotion and Information Council motor coach as it
stopped in a Henrietta parking lot earlier this month on its national tour touting
the advantages of ethanol.
But that family, skipping hand in hand across a green plain, almost surely wasn't
coming from the grocery store.
Biofuels such as ethanol — touted as one of the great hopes for lessening
America's dependence on foreign oil, as well as a key part of the Rochester
region's economic future — now are getting the blame for rising prices of
everything from gallons of milk to shrink-wrapped ground chuck.
A study by Iowa State University's Center for Agricultural and Rural
Development found that U.S. ethanol production from corn already has pushed
up food prices by $14 billion — or about $47 per American — a year.
Poultry giant Tyson Foods said that rising costs of feed were driving chicken
prices higher. Analysts also have blamed ethanol for the higher prime beef
prices.
The average retail price of a gallon of whole milk is hitting record highs, reaching
$3.80 a gallon, according to the U.S. Department of Agriculture.
Corn prices, meanwhile, rose to a record earlier this year but tapered off on
expectations of a big harvest. The Agriculture Department announced Friday that
this year's estimated corn harvest — 13.1 billion bushels — would be the nation's
largest in 74 years.
About 20 percent of the nation's corn went into making 5 billion gallons of
ethanol, pushing up corn prices and thus the cost of food, said David Pimentel, a
Cornell University ecologist and frequent critic of ethanol.
"Five billion gallons is a lot of ethanol," said the ecology and agriculture
professor.
"Suppose we converted 100 percent of all corn into ethanol. It would provide 7
percent (of the nation's fuel needs). It's not going to make the U.S. oilindependent. We're importing oil from Saudi Arabia and Venezuela to make the
ethanol," Pimentel said.
However, while ethanol is a factor in the rise in food prices, "it pales in
comparison to transportation costs (and) fertilizer costs," said Jeff Williams,
deputy director of public policy for the New York Farm Bureau and a member of
the state's Renewable Energy Task Force.
The Washington-based Renewable Fuels Association also argues that tying
ethanol to rising food prices ignores the role of the rising cost of oil.
Corn and soybean prices have been pushed up in large part on speculation
about increased demand for biofuels, which actually has hurt the nascent
biofuels industry, said Jason Masters, president of Northern Biodiesel Inc., a
biodiesel production company starting in Ontario, Wayne County.
"All the Wall Streeters who have invested in ethanol production facilities or
biodiesel facilities have pulled back," Masters said. "Hopefully we'll start seeing
the prices level back out."
Meanwhile, he said, more farmers are growing corn because of demand,
meaning less planting of soybeans, so Northern Biodiesel may have to use more
waste vegetable oil instead of virgin soybean oil in making biodiesel. The
company expects to be operational by this fall.
Ethanol and biofuels could see be a notable part of the area's economy.
Western New York Energy LLC is building a corn ethanol plant in Orleans
County. A Massachusetts company, Mascoma Corp., announced plans last week
to set up a demonstration plant in Oneida County, and another in Michigan, to
make cellulosic ethanol — ethanol from switchgrass, paper pulp and wood.
Mascoma also is involved in plans for a cellulosic ethanol plant in Greece.
As the Ethanol Promotion and Information Council's bus sat in a Lowe's parking
lot last week, staff there distributed pamphlets and other material about ethanol's
environmental plusses.
Joanna Schroeder, spokeswoman for the Nebraska-based organization, said
corn is likely only a near-term source of ethanol while the national infrastructure
gets set up.
"It's a stepping stone," Schroeder said.