In 2011, the United States—the world’s largest food exporter—converted 40 percent of its corn crop into fuel in order to satisfy the Renewable Fuel Standard (RFS). In fact, the total amount of ethanol produced in the United States in 2011 was 13.95 billion gallons, enough to feed 570 million people that year. This practice of converting food into fuel drastically restricts global corn supply, and continues to have real consequences for the 1.2 billion people around the world living on $1.25 or less per day.
As companies attempt to meet government mandates, we’re already seeing the effects: the Congressional Budget Office found that between 2007 and 2008, about 10 to 15 percent of food price inflation was a direct result of biofuels production. This unintended consequence has prompted humanitarian groups like ActionAid US and Oxfam to speak out against biofuels mandates time and time again.
Increased biofuels production mandated by the RFS has led farmers to take land and crops normally dedicated to feeding people and divert them into fuel for our vehicles. In essence, this has prioritized fuel over food.
A U.S. Department of Agriculture and Colorado State University study projects that meeting the RFS mandates in 2022 would require more than 40 million acres of land—land that could be used to grow corn wheat, or soybeans for food or feed.
Another study published in Environmental Science and Technology found that almost 80 percent of current U.S. farmland (or 60 percent of current livestock land) would have to be devoted to raising corn for ethanol production in order to meet the mandates. This would create competition for land and raise prices, while significantly reducing the amount of food U.S. farmers produce. It would also increase costs for food and animal feed, which accounts for 60 to 70 percent of the cost of raising turkeys and swine.
Biofuels and Rising Commodities Costs
Corn is a key feedstock for ethanol production. The conventional ethanol RFS mandate dramatically increases corn demand, increasing corn prices and putting competitive pressure on other agricultural commodities.
Since the summer of 2010, disappointing U.S. corn yields, worldwide loss of wheat crops, and increasing U.S. and international corn demand—including for use in biofuels—have increased corn prices from $3.50 per bushel to more than $7.50 per bushel, according to the Energy Policy Research Foundation. As corn fuel demand increases and soybean and wheat lands switch to corn, prices for soybeans and wheat have surged.
In order to relieve rising food prices caused by the ethanol mandate, a relaxation or temporary suspension of the mandate would be necessary. In fact, a new report by three agricultural economists at Purdue University found that if the EPA were to enact even a partial relaxation of the ethanol mandate, corn prices could be reduced by up to 20 percent next year.