Fueling the Food Crisis: The Cost to Developing Countries of U.S. Corn Ethanol Expansion

October 11, 2012

The U.S. Farm Belt is currently experiencing the worst drought it has seen in 50 years, devastating crops and raising corn prices to record levels. The ongoing spillover effect of this price spike is just the latest episode in a devastating, protracted global food crisis that has pushed millions into poverty and hunger around the globe over the past 6 years. It is clear that the promotion of biofuels by the US, the EU and other countries has played a major role in creating the food crisis. Without decisive action on the part of these global actors to eliminate mandates and incentives that encourage the unsustainable production of industrial biofuels, the crisis will continue with no end in sight.

The extended and widespread US drought is straining corn supplies at a time of record demand. Roughly 40% of US corn is now consumed in the production of ethanol, a practice that has been encouraged by a range of U.S. government mandates and incentives. There is no doubt that the diversion of what amounts to 15% of world corn supply into fuel has put significant upward pressure on food prices. The National Academy of Sciences estimates that global biofuels expansion accounted for 20 – 40% of the price increases seen in 2007-8, when prices of many food crops doubled.