Skip to main content

Paying more for food? Blame the ethanol mandate

By Kay McDonald, Special to CNN
updated 5:48 PM EDT, Mon August 20, 2012
The drought had a negative impact on corn in Le Roy, Illinois. Drought occurred in six Plains states between last May and August because moist Gulf of Mexico air "failed to stream northward in late spring," and summer storms were few and stingy with rainfall, said a report by the National Oceanic and Atmospheric Administration. The drought had a negative impact on corn in Le Roy, Illinois. Drought occurred in six Plains states between last May and August because moist Gulf of Mexico air "failed to stream northward in late spring," and summer storms were few and stingy with rainfall, said a report by the National Oceanic and Atmospheric Administration.
HIDE CAPTION
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
Extreme heat, drought ravage Midwest
<<
<
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
>
>>
STORY HIGHLIGHTS
  • Kay McDonald: Expect the price of meat, eggs and dairy products to go up
  • McDonald: America's policy of diverting corn to ethanol production is causing high prices
  • She says if we must have an ethanol mandate, then we should cut the level by half
  • McDonald: Better still, scrap the national ethanol mandate and let each state decide

Editor's note: Kay McDonald is the editor of Big Picture Agriculture.

(CNN) -- Because of the severe heat and drought in the Midwest, global food prices are going up. Why? Because the U.S. is the leading producer and exporter of staple grains. We are for food production what Saudi Arabia is for oil production. Our crop shortages have ripple effects throughout the food system and disrupt the global markets, especially in the food-insecure nations.

The U.S. hasn't reached 2008's level of high food prices yet because rice and wheat stocks are ample. These are the two most important food grains for human consumption worldwide.

Corn and soybean levels are extremely tight, and their prices have skyrocketed since June. However, these two grains are mostly used as livestock feeds. Corn is also diverted to produce ethanol because of our government mandate.

Opinion: Extreme heat and droughts -- a recipe for world food woes

Kay McDonald
Kay McDonald

Earlier this month, the United Nations urged the U.S. to ease its ethanol mandate. The origin of this policy goes back to 2005 when Congress set requirements of corn to be used for automotive fuel. In 2007, the Energy Independence and Security Act greatly increased those requirements to improve air quality and become more energy secure. Behind the scenes, however, corn and other agricultural lobbyists were promoting the mandate to create a larger market for corn. Using current numbers, this year's ethanol mandate would theoretically require 44% of this year's corn crop, a third of which is recycled back as distillers grains for livestock feed.

We are being told by the ethanol producers, the corn growers and Secretary of Agriculture Tom Vilsack that eliminating the ethanol mandate would not significantly reduce global food costs. But how could that be when roughly 14% of the world's corn crop is being converted into ethanol in the U.S.? In addition to corn being used for biofuel, taxpayer-subsidized biodiesel is using up more soybeans each year.

While some say that attempting to change the ethanol mandate is politically impossible in an election year that depends so much on the Midwest swing states, there is a loud and growing chorus of voices that are calling for an urgent end to the mandate. Greg Page, CEO of Cargill, one of the world's largest agricultural corporations, recently urged: "We need to move to more market-driven biofuels policies, not inflexible mandates, subsidies and tariffs."

Just as the USDA's recent estimate of a corn yield at 123 bushels per acre is certain to be reduced further, its estimate of food costs rising only 3% to 4% next year is certain to be raised.

The least politically palatable condition in any nation is high food prices. Expect beef, pork, chicken, turkey, eggs, fats and oils, cereals and dairy products to go up the most in the coming months. Americans have already reduced their meat consumption over the past few years partly because of higher prices.

It is time for policymakers to admit they made a mistake in setting the corn ethanol mandate level too high in 2007. This year, the mandate is 13.2 billion gallons of ethanol, which would require 4.7 billion bushels of corn. The mandate is set to top out in 2015 at 15 billion gallons.

If politics dictates that we must have an ethanol mandate, then at the very least we should consider cutting the level by half, which could be done by using only 5% ethanol, or E5, in gasoline instead of E10, which is a combination of 10% ethanol and 90% unleaded gasoline.

The mandate should never be allowed to use more than 20% of the annual U.S. corn crop. This amount would be enough to help stimulate corn demand for this overproduced commodity. As a bonus, more sustainable farming practices could return to the Midwest following this frenzy of growing corn on corn, fencerow to fencerow, to cash in on the high prices.

What would make the most sense would be to scrap the national ethanol mandate altogether and let each state decide.

Currently, ethanol use is not mandated in top corn producing states such as Iowa and Nebraska. These states choose to sell gasoline that doesn't even contain ethanol. This would suggest that they would rather export the product than use it themselves. Since they tout their ethanol product so highly, and it is available to them locally, they should consider increasing their own use of the product.

Meanwhile, consumers in low corn producing states such as Colorado and California are required to buy ethanol in every gallon of gasoline because ethanol use is mandated in those states.

The argument for the ethanol mandate is being challenged because of today's greater use of natural gas and the development of other fuel sources. It's time for the mandate to reflect the realities of 2012.

It often takes a crisis to get government to take action and correct a policy that was wrong to begin with. This growing season, we have had extreme heat and drought in the most productive farming region in the world. Let's use this unfortunate plight to get our ethanol policy right, before it causes food prices to go up more.

Follow us on Twitter @CNNOpinion

Join us on Facebook/CNNOpinion

The opinions expressed in this commentary are solely those of Kay McDonald.

ADVERTISEMENT
Part of complete coverage on
updated 12:50 PM EDT, Tue July 29, 2014
LZ Granderson says the cyber-standing ovation given to Robyn Lawley, an Australian plus-size model who posted unretouched photos, shows how crazy Americans' notions of beauty have become
updated 7:56 AM EDT, Mon July 28, 2014
A crisis like the Gaza conflict or the surge of immigrants can be an opportunity for a lame duck president, writes Julian Zelizer
updated 2:22 PM EDT, Sat July 26, 2014
Carol Costello says the league's light punishment sent the message that it didn't consider domestic violence a serious offense
updated 8:51 AM EDT, Mon July 28, 2014
Danny Cevallos says saggy pants aren't the kind of fashion statement protected by the First Amendment.
updated 2:52 PM EDT, Mon July 28, 2014
Margaret Hoover says some GOP legislators support a state's right to allow same-sex marriage and the right of churches, synagogues and mosques not to perform the sacrament
updated 2:31 PM EDT, Mon July 28, 2014
Megan McCracken and Jennifer Moreno say it's unacceptable for states to experiment with new execution procedures without full disclosure
updated 2:50 PM EDT, Mon July 28, 2014
Priya Satia says today's drones for bombardment and surveillance have their roots in the deadly history of Western aerial control of the Middle East that began in World War One
updated 12:35 PM EDT, Mon July 28, 2014
Jeff Yang says it's great to see the comics make an effort at diversifying the halls of justice
updated 11:55 AM EDT, Sat July 26, 2014
Rick Francona says the reported artillery firing from Russian territory is a sign Vladimir Putin has escalated the Ukraine battle
updated 2:22 PM EDT, Sun July 27, 2014
Paul Callan says the fact that appeals delay the death penalty doesn't make it an unconstitutional punishment, as one judge ruled
updated 6:25 PM EDT, Thu July 24, 2014
Pilot Robert Mark says it's been tough for the airline industry after the plane crashes in Ukraine and Taiwan.
updated 11:10 AM EDT, Fri July 25, 2014
Jennifer DeVoe laments efforts to end subsidies that allow working Americans to finally afford health insurance.
updated 11:33 AM EDT, Sat July 26, 2014
Ruti Teitel says assigning a costly and humiliating "collective guilt" to Germany after WWI would end up teaching the global community hard lessons about who to blame for war crimes
updated 8:45 AM EDT, Fri July 25, 2014
John Sutter responds to criticism of his column on the ethics of eating dog.
updated 9:02 AM EDT, Fri July 25, 2014
Frida Ghitis says it's tempting to ignore North Korea's antics as bluster but the cruel regime is dangerous.
updated 2:50 PM EDT, Fri July 25, 2014
To the question "Is Putin evil?" Alexander Motyl says he is evil enough for condemnation by people of good will.
updated 2:03 PM EDT, Thu July 24, 2014
Laurie Garrett: Poor governance, ignorance, hysteria worsen the Ebola epidemic in Sierra Leone, Guinea, Liberia.
updated 9:49 AM EDT, Thu July 24, 2014
Patrick Cronin and Kelley Sayler say the world is seeing nonstate groups such as Ukraine's rebels wielding more power to do harm than ever before
updated 6:05 PM EDT, Wed July 23, 2014
Ukraine ambassador Olexander Motsyk places blame for the MH17 tragedy squarely at the door of Russia
updated 7:42 AM EDT, Thu July 24, 2014
Mark Kramer says Russia and its proxies have a history of shooting down civilian aircraft, often with few repercussions
updated 2:53 PM EDT, Thu July 24, 2014
Les Abend says, with rockets flying over Tel Aviv and missiles shooting down MH17 over Ukraine, a commercial pilot's pre-flight checklist just got much more complicated
updated 9:17 AM EDT, Thu July 24, 2014
Mark Kramer says Russia and its proxies have a history of shooting down civilian aircraft, often with few repercussions
updated 12:37 PM EDT, Thu July 24, 2014
Gerard Jacobs says grieving families and nations need the comfort of traditional rituals to honor the remains of loved ones, particularly in a mass disaster
updated 10:13 AM EDT, Thu July 24, 2014
The idea is difficult to stomach, but John Sutter writes that eating dog is morally equivalent to eating pig, another intelligent animal. If Americans oppose it, they should question their own eating habits as well.
updated 12:30 PM EDT, Wed July 23, 2014
Bill van Esveld says under the laws of war, civilians who do not join in the fight are always to be protected. An International Criminal Court could rule on whether Israeli airstrikes and Hamas rocketing are war crimes.
updated 10:08 AM EDT, Wed July 23, 2014
Gordon Brown says the kidnapped Nigerian girls have been in captivity for 100 days, but the world has not forgotten them.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT