Ethanol Played Small Role in US Food Price Increases Last Year: Congressional Budget Office

corn field photo

photo: Kris via flickr

Surely this won't be the last word in how much ethanol contributed (or didn't) to last year's food price increases, or could have on future food prices, but a new report from the Congressional Budget Office says that corn-based ethanol added 0.5-0.8 percentage points to the overall price of food in the US:Increased use of ethanol drove up feed prices for livestock, leading to higher food prices, the report said. Rising prices for fossil fuels was cited as having a greater impact on food price than using ethanol as a motor fuel.

In 2008, the United States saw a 5.5% rise in food prices; the Department of Agriculture predicts a 3.5% rise for 2009.

More Processed Food Kept US Food Inflation Down
Which is all fine and good (not even delving into how they calculated that percentage), but other nations saw much greater price increases than did the United States. And as Lloyd pointed out last year, the US consumes more processed food than do other countries, so less of the price of that food comes from raw materials than it does in processing and packaging, and is therefore more resistant to inflation. Good for food prices, but hardly good news considering that all that processed food isn't always so good from the standpoint of nutrition.

More: CBO Director's Blog, The Impact of Ethanol Use on Food Prices and Greenhouse Gas Emissions (PDF)

via: Reuters
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