Congress and the President have passed countless laws and measures aimed at building America's ethanol industry. It is done in the name of decreasing dependence on foreign oil, and making America "energy independent." There are tax incentives in place, massive tarrifs on imported ethanol and more which have pushed farmers to divert production away from food towards fuel. Ethanol isn't inherently bad--in fact, it could be a very viable way to decrease our independence. The problem is CORN ETHANOL. Corn ethanol is at least 5-6 times less efficient than ethanol that can produced from sugar cane, or other plants, like switch grass.
What does this mean for the average American? Because the majority of the ethanol that is produced in this country is made from corn, it means broad price increases across the board. Farmers realize that they can make much more by growing corn as oppossed to other crops. It is hard to blame farmers throughout this crisis, who typically have a difficult time and often get little for their crops--they are just doing what makes economic sense. The consequences for the rest of the country have been stark: already, the price of wheat is up a whopping 120% this year alone. This translates into higher prices for basic staples like bread and baked goods. In America, this price increase has been hard enough, but around the rest of the world, it has been even worse. Even though we often do not feel like it, the average American is still much better off than citizens in other countries around the world, particularly in the developing world. A 120% increase a basic necessity in developing countries has had severe consequences. Already, there have been massive riots in countries from Haiti to Egypt. Recent price increases actually forced the Haitian Prime Minister from office, under threat from armed and angry mobs. In the future, if we continue to divert wheat and other crop production to corn, we can expect to see this kind of instability increase dramatically, and for more consequences to be felt here at home as well.
For much of the last several decades, the world has been largely reliant on the United States to supply food. Even though the US typically runs a large trade deficit, $708.5 billion in 2007 alone--one bright spot has always been US agricultural exports. The US typically exports billions of dollars worth of corn, beef and other farm-related products. Many developing countries have gotten used to low US prices and cheap US agricultural goods--only to find them snatched away by increasing artificial demand for corn, driven by government tax incentives. This only exacerbates hunger problems around the world. In addition, groups such as USAID (the US governments official humanitarian aid agency) are no longer able to provide the kind of food aid that they did in the past--everything costs more, even to these important groups. As a result, important gains that were made over the course of the last decade particularly in nutrition and in reversing malnutrition are slipping away.
Despite all of the negative news, ethanol doesn't have to be a bad thing. Ethanol produced from sugarcane or switch grass has more energy potential with less human cost. Some in Congress are just beginning to come around. Rep. Jeff Flake of Arizona recently proposed measures that would remove all tariffs and tax incentives--a step which would certainly decrease demand for ethanol which has been inflated by the federal government. However, the Representative should be careful not to elminiate incentives for more efficient ethanol production, such as sugarcane or switch grass.
One of America's top national security goals--if not the top national security goal should be to pursue energy independence. However, lawmakers must realize that this cannot come at the expense of average Americans who are facing dramatically higher costs, and people around the world who face food that they can no longer afford and rising instability. More investment in alternative ethanol and other promising alternative energies must become a priority sooner, rather than later.
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