By Ed Ulch
Rather than opinions on the notion that renewable fuels increase food costs, check out the facts. First, notice where the unfounded propaganda is coming from — not the grocery shopper, but the food manufacturers such as Kraft, which made record profits last year, and ConAgra.
World Grain stated in its February issue that “Grain-based food companies had record stock performance in 2012.”
Big oil companies are touting high food prices to stir the public and create resistance to renewable fuels that have replaced 10 percent of the gasoline and nearly 3 percent of the diesel usage. These oil companies are devoting more effort and money than ever to eliminate the Renewable Fuel Standard (RFS) and the use of ethanol and biodiesel because of greed for their own profits. You may have noticed Exxon recently took over from Apple the top position of most-profitable U.S. company, so don’t feel too sorry for the oil companies.
The RFS is working as intended: cutting dependence on foreign oil (now down to 46 percent imported from a high of nearly 70 percent), creating jobs in the U.S., revitalizing rural communities, and reducing harmful emissions, its primary objective (biodiesel reduces carbon emissions by 57 percent to 86 percent depending on feedstock).
Those biodiesel feedstocks include 55 percent soybean oil, which is a byproduct of crushing soybeans for the meal (protein). Biodiesel has increased the price of soybean oil from 15 cents per pound to 54 cents. This added value has the offsetting effect on the price of the meal, enabling it to be priced $38.50 per ton lower (Informa & Entrix study) than without biodiesel production, therefore resulting in lower cost of livestock feed and consequently lower prices for meat, eggs and milk.
The other 45 percent of biodiesel feedstock is a combination of used fryer grease from restaurants, animal fats and tallow, as well as rendered and recycled products — all of which would otherwise be sent to the landfill. The RFS is working as stated recently by U.S. Agriculture Sec. Tom Vilsack, saying our gasoline prices would be $1 per gallon higher if we did not have corn ethanol. Mark Four consulting claims the competition from biodiesel has reduced the overall cost of all diesel fuel by several hundred million dollars.
Regarding food prices, we spend the least per capita on food of any nation in the world and it is the safest food. A recent study shows, over the last year, that fresh produce and seafood prices have increased substantially. Not meats, milk, eggs or cereal. It does not take any corn or soybeans to produce seafood and fresh produce. Non-food grocery items are also up substantially.
Higher transportation costs are a large part of the reason for higher food costs. The average meal travels 1,430 miles to get to your plate.
This month, the USDA released a report stating that farmers get 15.8 cents average of every dollar spent on food. That is 19 cents for wheat in a $2.99 loaf of bread or 14 cents for corn in a box of cereal. So, an increase in grain prices, which results partly from renewable fuels, partly from increased exports of meat and grain, partly from inflation and mostly from the drought, only influences a small portion the farmer gets anyway.
Realizing that gas and diesel prices aren’t cheap, the costs of these items would both be higher without the advent of renewable fuels. And realizing food costs are nearly 4 percent higher, we must acknowledge it is due mostly to higher costs of transportation and the drought in particular this year, not renewable fuels.
We still champion the affordability of quality food and cleaner renewable options for our fuel. At the same time, we can remain comfortable with the RFS doing what Congress intended for the benefit of everyone, especially those of us who like to breathe cleaner air.
Ed Ulch, a farmer from Solon, is a director for the Iowa Soybean Association and is vice chairman of the National Biodiesel Board and past president of what is now Agribusiness Association of Iowa. Comments: email@example.com