UPDATE — 3:30 p.m. — White House spokesman Tony Fratto was asked at the midday briefing on ethanol's role in driving up global food prices, and said it is unfairly taking the blame for the problem.
Here is a transcript of his comments:
MR. FRATTO: I don't want to minimize it. I also don't want to overplay it. And I've seen a lot of, you know, reporting that has tried to draw a direct link between, you know, ethanol and food prices.
And if you really take a look at the breakdown of food prices in this country, and the contribution because of biofuels, it's not as significant as some of the reporting that I've seen has made it appear, you know, for a lot of different reasons.
One, there are a lot of other factors that are affecting our food prices. You know, we have competition for exports. We have the, you know, increasing cost of energy that makes things like fertilizer more expensive. It makes transporting and distribution of food more expensive.
But the biggest thing if you ask, you know, why in certain countries do you see, you know, much higher increases in the price of food than you're seeing in the United States?
That's because the vast majority of the food that we eat in the United States is processed or served in restaurants, and a lot of the cost comes from these other value-added efforts, whether it's the packaging, the marketing, the distribution, serving it to you at your table. And that's where most of the cost comes from.
Also remember that, you know, the biggest impact on price with respect to, you know, grains in this country is, you know, pretty much limited to corn, where, you know, you're seeing corn prices rise. And that's only a portion of most food products.
If you go to a developing country, you know, if you go to — or even if — you know, even if you go to Mumbai and walk — in India and walk into a market, you know, what you'll see are stacks of flour and rice and, you know, milk in large containers. You know, these are people who are living on, you know, one or two or three dollars a day, and they're buying commodities. So if the price of rice doubles in Thailand at the local market, and you're used to spending 70 cents out of a dollar — you know, the dollar a day that you earn — on food, now all of a sudden you're — you know, you need to cut back your food.
And so it is a very acute problem in poor countries that, you know, the bulk of their food purchases are — you know, are commodities with not a whole lot of value added to them. It's less acute a problem in this country. And I don't say that to minimize it. A lot of families out there, you know, who buy the staples, you know, who are buying milk and eggs and bread and seeing these price increases, it's significant for them, and it's something that we — you know, we're keeping a close eye on. It just has not had the same explosive effect in this country that you would find in poorer countries.
Q Just to get to — biofuels are unfairly taking a lot of the blame for this.
MR. FRATTO: Yeah, they're just one of a handful of reasons for and not the biggest reason.
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The White House this morning cautioned against rushing to judge ethanol as a root cause of escalating global food prices.
"There's been a lot reported, maybe too much attention, to biofuels and maybe not enough to all of the other factors that affect food prices, especially in this country, where it is a tiny slice of increased food prices," said White House spokesman Tony Fratto.
The Washington Times' Stephen Dinan this morning reported on members of Congress who are looking to roll back ethanol-boosting legislation:
Members of Congress say they overreached by pushing ethanol on consumers and will move to roll back federal supports for it — the latest sure signal that Congress' appetite for corn-based ethanol has collapsed as food and gas prices have shot up.
House Majority Leader Steny H. Hoyer said Democrats will use the pending farm bill to reduce the subsidy, while Republicans are looking to go further, rolling back government rules passed just four months ago that require blending ethanol into gasoline.
On Tuesday, President Bush said that "85 percent of the world's food prices are caused by weather, increased demand and energy prices — just the cost of growing product — and that 15 percent has been caused by ethanol, the arrival of ethanol."
— Jon Ward, White House correspondent, The Washington Times
Comments (4)
Seems like the government is again unrelaible. First they say we will help you build ethanol plants by giving you a subsidy. Now these same people want to take it away after people have invested their money based on the goverments word. What kind of government is that that make a promise and then breaks it. Would that be classified as a lie? It seems we have forgotten that a large factor in doing renewable fuels was to be energy independant, thereby reducing funding for our enemines and if I remember correctly we were anti hydrocarbon due to emissions. Have we corrected our emission problems and are energy independant already? Boy that was quick. Pick out those yo yous and vote against them.
Have a good day...
John
Posted by John F | May 1, 2008 3:29 PM
Ethanol may not have been the root cause, but it was definitely the trigger event that propagated the current food shortages. You can't impose huge changes that shift a market in equilibrium and not expect corresponding and significant impacts. Yes, weather, demand and energy prices all affect it and the market to date has been stable enough to absorb those changes. All of the factors in equilibrium are vectored toward a market for human biological consumption, not energy. Biofuels removed a huge portion of the biological consumption vector and destabilized the equilibrium which will require time to recover. The question is at what cost? AND, will the benefit support the cost? The answer is NO because we have no proof that reducing carbon dioxides will control the climate and the supplemental addition to carbon energy will not offset the rising costs. We need behavior modification models and an cost effective energy source that has the same potential energy and utility as a tank gasoline. Biofuels ain't it. Until we can develop it we need to increase supply to meet demand. ANWR and Bakken formation.
Posted by Larry Stone | May 2, 2008 10:26 AM
I have seen consistent complaints from consumers for mileage loss between a 10 to 15% loss. I go through a tank of gas much faster. If I was losing what the government claims because ethanol has a lower energy value of 30 percent which with ethanol added to gasoline at 10% would be a 3 percent mileage loss, I would never notice it. What I�m wondering is if anyone is reaching the conclusion I am which is that if we're adding 10 percent ethanol to gasoline and losing between 10 and 15 percent mileage, well do the math. If this country has been throwing away 10 and 15% mileage while also paying for the ethanol industry to pretend it's producing fuel, well it is no wonder the economy is falling apart.
And about ethanol�s relationship to honeybees disappearing nationwide from a mysterious disease called CCD, Colony Collapse Disorder -
What's killing honey bees is byproducts of making and using ethanol mixed with gasoline. But the government is pretending this isn't the problem because farmers are making too much money off ethanol so anyone who says anything about it in the farming community becomes a pariah where they live. But they all know it because it started when ethanol production plants started polluting the Midwest and vehicles started pumping out acetaldehyde from their exhaust pipes in 2006, which acetaldehyde is what causes a hangover after getting drunk. It builds up on plants during the winter and kills them when they come out for spring cleansing flights. That�s why sterilizing hives doesn't work, it isn't a disease. They get drunk and sick and die.
Posted by Bobby Fontaine | May 2, 2008 10:37 AM
Fratto: You know, um you know, and then, you know, but um, you know, but really, you know, it is, you know. You know? Isn't this a sign of the someone who is, you know, lying? Nothing like the knee-jerkk politicians, who jumped on this idiocy called ethanol without foresight or forethought. Guess drilling for the OIL we know is there, rather than a dubious policy with disaterous results, would have been, you know, too easy. You know?
Posted by jhohnwill | May 2, 2008 11:38 AM