August 08, 2012
Drought Re-Ignites Food vs. Fuel Fight
GALVA, Iowa — This summer’s scorching drought in the US Midwest has re-kindled a fight over the supply of maize as competition heats up between livestock producers and ethanol fuel production.
The price of maize – called corn in the United States – is soaring on global markets, pushing up the price of meat, milk and eggs as the cost of feeding animals goes up.
However, a growing proportion of US corn is used to produce ethanol for auto fuel.
It has helped spark an economic boom in parts of rural America. In corn-farming towns like Galva that had been shrinking for decades, new homes are being built. A new 400-seat performing arts center opened at the local school.
And farmers like Alan Bennett are buying new equipment.
"[There are] three ethanol plants within easy driving distance of here," he says. "And there is a lot of competition for corn now. And there was not before."
In 2005, Congress passed a law requiring ethanol in U.S. gasoline. One reason was to produce more fuel at home, says Delayne Johnson, manager of the Quad County Corn Processors ethanol plant in Galva.
"As we have domestically-produced products, we have less dependency on the Middle East, where we have obviously spent money trying to defend that area," says Johnson.
Use of domestically-produced ethanol has grown as government requirements have increased. Now, at least a quarter of the U.S. corn crop is turned into fuel.
Economists say that is one reason the price of corn is triple what it was before 2005.
The ethanol animal
Bill Tentinger grows corn a hundred kilometers away, in Le Mars, Iowa.
But he also feeds corn to his pigs. He supports ethanol...to a point.
"It has been over-done, which creates a huge animal consuming [corn] that we have to compete with," says Tentinger.
Cattle, pigs and chickens are competing with that other corn-consuming animal, ethanol, like never before, as this year's drought dramatically cuts the corn supply. Corn prices have set a new record. The livestock industry is facing big cost increases, and some meat producers may go out of business.
So the industry is asking Congress to waive the law that requires ethanol in gasoline.
"If we do not waive that law and the ethanol industry is allowed to continue to make [ethanol], the crop is going to get [eaten] up, and it is not going to go into food," said Tentinger.
Tentinger says the cost of food will go up, hurting consumers already struggling in a slow economy.
But farmer Alan Bennett says waiving the law would be a blow to his town, and to consumers as well.
"It could bankrupt the ethanol plant," he said. "It is a huge deal. This country relies on ethanol for 10 percent of its fuel supply. Ethanol is good for America."
Bill Tentinger agrees. But he says this year's drought has made him think differently.
"I have not been one of these [people] that have really argued the food-versus-fuel argument, but yet, in the end, maybe it does come down to that," he said.
With the ethanol industry now a fixture in the U.S. economy, that argument is likely to continue.
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