Wisconsin Bio Industry Alliance: CBO report shows ethanol not responsible for rising food costs

Contact: Joshua Morby 414.791.9120

Despite some media reports, CBO debunks food vs. fuel myth

MILWAUKEE – A new report by the Congressional Budget Office (CBO) regarding the effects of increased ethanol production on the cost of food corroborates past research on the issue, showing that ethanol is not a major factor in rising food prices.

The report estimates that increased corn usage due to ethanol is responsible for only 10-15% of the rise in food prices. That equates to 0.5-0.8% out of the 5.1% increase in food prices over the period examined.

The report noted, “certain other factors – for example, higher energy costs – had a greater effect on food prices than did the use of ethanol as a motor fuel.” Despite this, several reports in the media suggested that it was federal ethanol policies that were driving up the cost of food, while ignoring the role of energy prices in the equation.

“Some of the spin on this report is enough to make you dizzy,” said Joshua Morby, Executive Director of the Wisconsin Bio Industry Alliance (WBIA). “The report is absolutely consistent with what we’ve been saying all along: energy costs, not ethanol production, have been the major factors behind rising food prices, and any attempts to further demonize ethanol on this issue should be exposed as the outright lies they are.”

The CBO report follows several other studies from Professor Randy Fortenbery at UW-Madison, LECG, and the Federal Reserve Bank of Kansas City that show ethanol is not a major factor behind rising food prices.

“Despite efforts by Big Oil and other groups to spin reports like the one from the CBO to their advantage, other factors like energy prices are the major culprit in the rising cost of food,” Morby said. “In fact, biofuels like ethanol actually help reduce the cost of gasoline, reduce our dependence on fossil fuels, improve our environment, and create good, high paying-jobs here in Wisconsin. Biofuels absolutely deserve to play a role in fulfilling America’s energy needs.”

The Wisconsin Bio Industry Alliance is a diverse group of businesses, environmental groups, and statewide and local organizations that have come together to build both public and legislative awareness of the Bio Industry in Wisconsin.

For more information about the Alliance, or to find out how to join, please visit our website: http://www.wisconsinbioindustry.com.