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Ethanol industry vs. poultry industry: Statistics and where the truth lies

Is ethanol raising our food prices

"There are three kinds of lies: lies, damned lies, and statistics."

Some attribute this quote to British Prime Minister Benjamin Disraeli, but most scholars believe it was Mark Twain who coined this colorful, yet accurate observation.

A case in point is a battle that has begun on the editorial page of the Minneapolis StarTribune. On one side are two members of Minnesota’s poultry industry, John Burkel and Mike Helgeson, who recently blasted the corn ethanol industry, blaming it for rising chicken and turkey prices. See editorial HERE

On the other side is Gary Pestorious, a board member of Growth Energy, an ethanol industry trade group, who says the ethanol industry is actually helping the livestock industry because a byproduct of the ethanol process are distiller grains, sold for feed. See Editorial HERE

Pestorious accused the poultry men of “cherry picking data” and unleashing misleading statistics to bolster their argument. Pestorious then sauntered into the cherry grove himself to select the ripest berries to make his case for the ethanol fuel industry.

One of his biggest whoppers was thrown down almost as an afterthought at the end of his editorial when he wrote:

“… ethanol is reducing the level of greenhouse gas emissions from our vehicles, helping improve our environment.”

It’s cleverly worded. That’s because, yes, in looking at the isolated case of the emission of car fortified with ethanol fuel it will emit less greenhouse gas. However, to really determine if ethanol is not contributing to climate change, the entire life cycle of the ethanol process must be taken into account – from growing corn and land use, all the way to cooking the stuff at the ethanol plant.

By this measure ethanol doesn't do well – in fact, now that more ethanol plants are burning dirty coal to drive the ethanol process, ethanol is almost certainly increasing greenhouse gases, not reducing them. Jason Hill, a research associate in applied economics at the University of Minnesota, was quoted in a recent issue of Scientific American:

"Right now, there is no clear data that shows corn ethanol has the effect of reducing greenhouse gas emission."

Hill's study of greenhouses gases and athanol was published in The Proceedings of the National Academy of Sciences.

That study concluded that ethanol is worse (and even much worse) for the environment than traditional fuels. The study said:

…. that the combined climate-change and health costs are $469 million for gasoline, $472 million to $952 million for corn ethanol...”


Pestorious also said that Burkel and Helegson’s claim that the ethanol industry is absorbing 40% of the corn crop is false because they fail to acknowledge that a significant byproduct of the ethanol process are distiller grains, which can be fed to livestock. Pestorious says that, when taking into account distiller grains, ethanol is using effectively only 17.5 percent of the corn crop.

“The ethanol industry uses only the starch from corn to produce fuel. Millions of tons of distiller’s grains are produced each year as high-protein, reasonably priced byproduct for livestock feed,” Pestorious writes.

But now here is what Mike Brown, President of the National Chicken Council, says about the value of distiller grain byproducts from ethanol plants:

Chicken feed rations require high energy and high protein. The majority of the feed energy in DDGs is removed by the ethanol manufacturing process, and corn’s protein component is damaged by the heat in the drying process. These deficiencies, along with poor amino acid balance, variability of quality and composition, and digestibility issues, keep chicken farmers from using DDGs to make up more than 5 percent of the chicken feed ration. Simply put, DDGs have the oil squeezed out, so they contribute extremely little energy to the feed ration, which is vital for birds’ diets. Source

So what about the statistics used by Burkel and Helgeson, who blame corn ethanol for driving up food costs? For example, they write:

Our money doesn't stretch nearly as far as it used to at the supermarket. This is because consumers have recently shared in record-high prices: 35 percent more for chicken and 52 percent more for turkey over the seven years. No, the timing is not coincidental. Those prices have significantly increased since the Renewable Fuel Standard was implemented in 2007. In 2012 alone, the average family of four saw an increase of approximately $2,000 in yearly food costs.

Although the number of variables and factors which effect any commodity in a global market are extremely complex, Burkel and Helgeson would appear to be on firmer ground than their detractors in the ethanol industry.

For example, Peter Suderman, writing at Reason.Com states:

There’s very little question about whether or not ethanol subsidies and related mandates, which essentially pay farmers to grow fuel instead of food, drive up the price of food. Ethanol policy hits corn directly, but because corn is so integral to the rest of the food production process, a rise in the price of corn quickly results in a rise in the price of other farm commodities such as meat, poultry, dairy, and soy products. When the Congressional Budget Office looked at the impact of ethanol subsidies on overall food prices between April 2007 and April 2008, the nonpartisan scorekeeper found that 10-15 percent of the 5.1 percent rise in food prices, as measured by the Consumer Price Index, could be attributed to ethanol subsidies. Source

Ample support from other sources for the ethanol-food-hike phenomenon can be found as well, including this one: Food Costs Are Eating American Family Budgets.

And yet, consider this: The fact is that, despite the recent spike in food costs, the cost of feeding a family is still significantly lower today than it was in the 1980s after adjustments are made for inflation and a variety of other factors. See More

It can’t be said that the corn ethanol industry was generating high food prices in the 1980s – something else was.

What this demonstrates are the pitfalls of making arguments that are heavily predicated on short-term statistical data, and also by extracting specific conclusions out of situations that are as inherently and enormously complex as are global markets factors for food and fuel.

Even so, in the recent StarTribune smack-down between Minnesota poultry producers and ethanol producers, Round 1 would appear to go to the bird men. Stay tuned.


Ken Korczak is the author of: BIRD BRAIN GENIUS

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Join Ken on Twitter: @kenkorczak


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