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Tuesday, August 14, 2007

Ethanol Production and the Price of Food

Ethanol Production and the Price of Food

As a replacement for gasoline in automobiles, ethanol is touted by the President and Congress as a solution to reduce our dependence on foreign oil. But as ethanol production has risen this year, so has the price of corn, the primary grain used today to produce ethanol. That has many people blaming ethanol for the rise in food prices.

A box of corn flakes only has a nickel's worth of corn. What impacts consumer food prices far more than the price of corn is the energy, the marketing, the packaging, everything else that goes into bringing a box of corn flakes into grocery stores. In fact, studies show that the price of gasoline has more than twice the impact on consumer food prices than does the price of grain.

All automobiles are capable of running on fuel that is 10% ethanol and 90% gasoline. Flex Fuel vehicles can run on up to 85% ethanol. Today, there are around 6 million Flex Fuel vehicles on the road that reduce dependence on petroleum, reduce CO2 emissions and reduce the amount imported oil.

According to the National Corn Growers Association, farmers in the U.S. planted nearly 93 million acres of corn this spring-the most since World War II. The record acreage was in anticipation of greater demand for ethanol, and the Corn Growers predict there will be plenty of corn for food and fuel.

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