President Bush's press conference on Tuesday reaffirmed a growing world concern of food shortages and the potential for tight supplies in years to come.
A growing anti-ethanol movement, especially in the media, paints ethanol as the evil catalyst behind rising food prices. President Bush correctly put in context that ethanol may be responsible for roughly 15% of the rise in prices, but that energy costs and weather are the primary forces behind increased food prices. For the purpose of this Perspective, we will lump all bioenergy under the title of ethanol.
During the 1992 Presidential election, the Clinton campaign used the slogan "It's the economy - stupid". The idea was simple: people could identify with poor economic conditions, and determine it was time for change. While the media has free reign to gather and disseminate information as they see fit, the reality of current tight grain inventories has little to do with the ethanol industry. In addition, current high prices may be the cure for high prices. Think about it!
The genesis of bioenergy was input due to the expectation of peak oil supplies. That is, supplies of crude oil would peak shortly after the year 2000 and tail off. Alternative energy sources would be needed. Over the last 25 years, improvements in farming practices on all levels have contributed to adequate and often excess food supplies. Recently, poor weather, growing world economies and skyrocketing demand for energy has food prices on the rise with no immediate near-term fix. The cost of higher energy affects all aspects of food, especially the movement of products as transportation costs are passed on to the consumer. Bottom line, skyrocketing oil prices are behind most of the rising costs of food.
To stack harsh criticism on ethanol as an industry in which few benefit (other than farmers and plant shareholders) is not only unjust, it is flat wrong. It may be in vogue to criticize, but it is still wrong. Farmers, who have produced cheap corn for decades, seized an opportunity to develop alternative energy sources using excess inventories. They took the risk investing in ethanol plants, planting more corn acres, or both. In many cases they have been rewarded. That is the American way! If the world does not like it, so be it.
Market forces and time will ultimately determine whether ethanol is a viable alternative for energy. History suggests necessity creates innovation. With high energy prices, it is likely just a matter of time before innovation provides solutions. The current media trend to malign farmers for making an above average income for a year or two is not a solution. As input costs rise, there is a potential for financial disaster on the agriculture horizon. The prospect for unprofitable farming margins should be more of a concern for the world then farmer profits. If farmers are unprofitable, then where will food come from? That should be the real story!
If you have questions or comments, contact Bryan Doherty at Top Farmer at 1-800-TOP-FARM ext. 129.