Will Biofuel Drive Up Food Prices?
President of an investment group and former Clinton adviser disagree with National Corn Growers Association on biofuel production's effect on food prices.
Sam Anderson
Published: Mar 28, 2007
Agriculture groups and economists continue to weigh in on the "food vs. fuel" debate, this time arguing whether or not biofuel demand will result in higher food prices.
The National Corn Growers Association released a report Tuesday that recent increases in corn prices are unlikely to impact consumer food prices.
The study, conducted for NCGA by Advanced Economic Solutions, concludes that if current corn prices recede back to historical levels because of a significant increase in production this year, there would be little or no impact on consumer food prices. The paper does acknowledge that if corn prices remain at the $3.50-4 per bushel range for several years, consumers might experience marginal food inflation for some grocery items.
David Sunding, a former White House economist on Bill Clinton's Council of Economic Advisers, takes that acknowledgement farther.
"Worldwide, especially in developing countries • food price increases are definitely something we're going to have to come to grips with," he told water experts at the University of Nebraska-Lincoln's annual Water Law, Policy and Science Conference.
Sunding says rising energy prices and ethanol production's demand for corn will combine to drive commodity - and food - prices higher.
Farm Futures' Mike Wilson reported earlier this week that Randall Pope, President of a farmland investment company in Illinois called Westchester Group, thinks America's low food prices will start climbing. Currently, the amount of disposable income Americans spend on food is the lowest in the world, at 10%.
But Pope sees biofuel and other market influences pushing food prices higher. "That 10% Americans spend on food? That ride's over."
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Tagged: farm, farm futures, ethanol, National Corn Growers Association, Bushel
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