THE BLOG
12/12/2008 05:12 am ET Updated May 25, 2011

Food Fight; Falling Corn Prices Reveal Big Food's Lies

The American economy has fallen on tough economic times and the effects have been felt in the pockets of the American people. In fact, economic output fell at an annual rate of 0.3 percent in the July-September period, a significant slowdown after growth of 2.8 percent in the prior quarter1. American families have been hit hard at the grocery checkout line with rising food prices. According to the Bureau of Labor Statistics, the index for food at home is up 7.6 percent over the past year. American families haven't seen such dramatic food price hikes in over twenty years. In addition, the unemployment rate is the highest it's been in 14 years, soaring to 6.5 percent in October. Now, more than ever, Americans need honest answers.

In recent months, when it was convenient for them, critics of the biofuels industry were quick to place blame for rising food costs on ethanol, claiming that ethanol was increasing the price of corn. But, if this argument were true, now that corn prices have fallen by more than fifty percent and gas prices are tumbling, food prices should follow suit. Right? Wrong. While ethanol was getting blamed, agricultural economists and experts alike said that ethanol production had minimal impact on food prices. And now that the price of corn has dropped and food prices have continued to rise, the assertion that food prices and ethanol production are strongly linked has been proven false.

As ethanol producers, we have come together to ensure the truth is told about ethanol and the misinformation major food producers have been spreading about clean, green biofuels begin to be exposed as an intellectually dishonest smear campaign. Not only does ethanol boost our energy independence and lower the cost of fuel, ethanol producers are boosting our economy today with high-paying jobs and investments in our rural communities. Instead of sending dollars and jobs overseas, American ethanol producers create green jobs at home and support America's farmers.

While Americans continue to struggle to make ends meet, the revenues of a major food producer, Kraft, saw an increase of nearly 20 percent from the year-earlier period. Kraft's net income shot up in the third quarter to $1.4 billion, while Americans watched their purchasing power decrease and incomes dwindle2. Additionally, while American families look for ways to cut back on spending, sales at another major food company, Kellogg's, climbed 9.5 percent, reporting a third-quarter net income of $342 million, up from $305 million the year earlier3.

The American consumers are the bread and butter for the food producers, but Big Food isn't delivering lower food prices despite the dramatic decrease in corn prices. Keep in mind that it's the ethanol producers who are actively providing a solution. In 2006 alone, the ethanol industry helped create more than 160,000 jobs in various sectors of the economy. The Department of Energy (DOE) estimates that for every one billion gallons of ethanol produced, 10,000-20,000 additional jobs will be created. And these jobs cannot be outsourced to other countries. In addition to creating good paying jobs right here in the United States, ethanol use reduces the price of gas by as much as 20-35 cents/gallon (DOE estimate), saving the average American household $150-$300/year.

Big food producers and their trade associations have continually tried to make American ethanol producers and farmers the scapegoat for higher food prices. The American people won't stand for getting the wool pulled over their eyes on this issue any longer. We must not let a few big food producers get in the way of real progress in our march toward energy independence, a stronger economy, and a healthier environment. Ethanol producers are on the verge of innovative breakthroughs that will make ethanol even cleaner and greener in the long-term. Let's not let a Washington-led smear campaign get in the way of progress. As ethanol producers that have traveled to Washington from various rural corners of the U.S., we believed it was necessary to come together and launch Growth Energy -- and expose the Truth About Big Food.

1. National Public Radio
2. Wall Street Journal, October 31, 2008
3. Wall Street Journal, October 31, 2008