‘Consumers Lose’: Biden’s Ethanol Gambit Will Send Food Prices Soaring, Critics Say

• Corn prices, and therefore meat prices, are expected to surge amid the global food shortage following President Joe Biden’s latest attempt to ease gasoline prices, according to industry groups and experts.
• “It certainly would be expected to drive up food prices and it will likely hurt meat producers because they rely on the feed,” Heritage Foundation senior research fellow Daren Bakst told the Daily Caller News Foundation in an interview.
• “Further and artificial demand for corn created by this administration will likely increase the cost of corn and all food products dependent on corn and corn oil inputs,” National Chicken Council President Mike Brown told the DCNF.

President Joe Biden’s latest attempt to ease consumers’ pain at the pump could lead already-surging food prices to increase further, experts and industry groups said.

Biden issued an emergency waiver Tuesday allowing gas stations nationwide to sell gasoline with 15% ethanol, pausing a federal environmental regulation that prohibits the corn-based biofuel mixture during the summer months to limit smog. American consumers are currently facing record-high pump prices and soaring inflation at levels not seen since 1981.

“It certainly would be expected to drive up food prices and it will likely hurt meat producers because they rely on the feed,” Heritage Foundation senior research fellow Daren Bakst told the Daily Caller News Foundation in an interview.

Corn and soybean meal, which is used to feed livestock, is the largest cost for chicken producers, according to the National Chicken Council (NCC). The group warned that Biden’s action would lead to higher meat prices since it boosts demand for corn.

“Further and artificial demand for corn created by this administration will likely increase the cost of corn and all food products dependent on corn and corn oil inputs,” NCC President Mike Brown told the DCNF. “What it does at the gas pump we shall see … but at what expense to consumers in the grocery store who are already dealing with the highest inflation in 40 years.”

“At the end of the day – ethanol manufacturers win and consumers lose,” Brown added.

In March, overall inflation increased 8.5% year-over-year, its quickest rate in more than 40 years, the latest federal data showed. Food prices surged higher, at a rate of 8.8% between April 2021 and March, the largest 12-month increase since May 1981.

The price of corn, in particular, surged 37.8% from $3.97 to $5.47 per bushel between December 2020-December 2021, according to the Department of Agriculture. Corn futures have surged more than 44% relative to the December price in the wake of Biden’s announcement, Chicago Mercantile Exchange data showed, hitting $7.9 a bushel on Thursday.

“Burning food for fuel makes no sense at all when the Biden administration and others warn of widespread upcoming food shortages as a result of the Russian invasion of Ukraine,” Heartland Institute President James Taylor said in a statement shared with the DCNF. “It’s almost as if the Biden administration is deliberately calculating how to make food-price inflation worse.”

The Ukraine crisis has triggered a global food supply shortage that experts have warned could worsen.

Meanwhile, the National Cattlemen’s Beef Association (NCBA), another group that represents meat producers, has previously characterized the 2005 Renewable Fuel Standard program as “government policy picking one industry over the other.” The program mandates that energy providers replace a certain amount of petroleum-based fuel with renewable fuel, including ethanol, over time.

The NCBA declined to comment Thursday on Biden’s ethanol action.

‘Virtually undetectable’

However, groups in favor of Biden’s action Tuesday said the criticism from meat groups was a “red herring” and that it would have little impact on corn supplies. There is currently more than a billion gallons of ethanol in storage and farmers intend to plant 89.5 million acres of corn in 2022, according to Andrew Walmsley of the American Farm Bureau.

“This is not a ‘one or the other’ issue,” Walmsley, the AFB’s senior director of congressional relations, told the DCNF. “America has the resources to produce homegrown, renewable fuels while also meeting the demand of ensuring there is food on the table and our livestock are fed.

Walmsley added that the Ukraine crisis and supply chain issues are the main culprits for higher global food prices.

“In short, the amount of corn needed to meaningfully expand E15 this summer is minuscule,” Troy Bredenkamp, the senior vice president for government and public affairs at the ethanol advocacy group the Renewable Fuels Association, told the DCNF in an email. “Indeed, the amount of corn needed to double current E15 use is equivalent to just 0.3% of last year’s U.S. corn crop.”

“The impact of an emergency E15 waiver on grain markets would be virtually undetectable, but the impact on pump prices for E15 consumers would be substantial,” he added. “While every additional gallon of E15 sold will help relieve very tight fuel supplies, especially as the summer driving season gets into full gear, clearly there will only be a slight incremental effect on corn prices and no change in U.S. retail food prices.”

A spokesperson for Growth Energy, another group that represents ethanol producers including the Iowa facility Biden visited Tuesday, shared a report that tied food prices to the crude oil market in response to an inquiry Thursday. Domestic ethanol production represents less than 30% of global corn demand, “insulating ethanol’s impact” on food prices, according to the report.

“The price of food is driven by the price of oil – not ethanol,” the spokesperson told the DCNF.