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More fiction on food prices from Big Oil and the GMA

10/20/2010 @ 9:26am

Dan Looker's report on the panel in Naples, Fla., that attacked domestic ethanol in a meeting on Oct. 19th clarified several things: first, that truth is a victim when the panel is stacked by representatives of Big Oil, and second, that opponents of ethanol will go through any contortion to spread misinformation, particularly the "food versus fuel" fiction.

First, Ian Goldin, the former World Bank VP who appeared on the panel sponsored by the Chicago Mercantile Exchange, seems to have missed the most recent report by the World Bank reversing its position on 'food-v-fuel.' The World Bank's newest study says the connection is minimal - if it exists at all. You can read that World Bank paper here.

Second, Joe Glauber, an economist with USDA, went through all these claims and easily refuted them, point after point, in testimony he delivered to the U.S. Senate this year. Glauber pointed out that there are a series of contributors to high grocery prices -- most notably, the high cost of oil -- that contributed far more to the high food prices than did demand for biofuels. You can read that testimony here.

It is really irresponsible for this panel to throw around words like 'starvation' in connection to grain ethanol. The corn used to make ethanol in this country is field corn. In fact, a co-product of ethanol production are the Dried Distiller's Grains which go right back into the food chain in the form of one of the highest-quality livestock feeds on the market. So where exactly does this take food away from people? How exactly does this starve people? To that point, most of the economists who have looked at this issue found that high OIL prices contributed to higher food prices, and that rampant Wall Street speculation had much more to do with driving up food prices.

Probably the best refutation came from the food companies themselves, when General Mills CFO Dan Mulligan was quoted in the St. Paul Pioneer Press last year, after his company (the top user of grains in the world) posted a record 51 percent profit increase. In that story, Mulligan said that the public "doesn't understand" how little grains are to their input costs, and amount to "five or ten percent" of his company's costs. That's right from their horses mouth, and shoots down the entire food-v-fuel fiction.

You can read more on this issue - including the full Glover Park proposal to GMA on how to "spin" high food prices into an attack on grain ethanol - on Growth Energy's blog, here.

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