The fallacy of Ethanol: Ethanol related to unrest in Egypt [IndyCar and NASCAR take a bow.] Demonstrators standing on an army vehicle in Tahir Square. Image via WikipediaEgypt, the world’s largest importer of wheat, brings 11 millions tons into the country each year. This year, due to heavy rains in Canada, drought in Russia and floods in Australia food prices in the country have skyrocketed. While adverse weather conditions can be blamed for a disappointing harvest in many wheat producing nations, in an effort to promote the ethanol industry the United States has been enticing farmers to grow less wheat and more corn, further increasing world food prices and discontent.
Responding to rising demand and diminished supply, the worldwide food price index has risen to all-time highs, according to the Food and Agricultural Organization of the United Nations. The cost of all cereals, which includes wheat, rice and maize, jumped 39 percent in 2010, the World Bank reports, and the price of wheat alone rose by a staggering 74 percent between June and November.
Though the Egyptian government has subsidized wheat in an effort to combat the price hike, the high costs of certain food items, which has been a common complaint among protesters, have risen by 20 to 30 percent in recent months.
In the United States, as the ethanol industry, support by government subsidies, blossomed, corn has become more profitable than wheat and farmers have taken notice. Since it’s peak in 1981, the number of acres harvesting wheat in the United States has declined by 30 million, or nearly one-third, according to the Department of Agriculture. With the United States providing between 20 and 30 percent of the world’s wheat exports, the shift to corn is particularly troubling for countries that depend on wheat imports, especially as world populations continue to grow.
Of the corn that is produced, a growing percentage is being used as fuel instead of food. The Wall Street Journal reported that only 7 percent of U.S. corn crop went to ethanol in 2001. That number rose to 39 percent in 2010, and according to the Department of Agriculture’s ten year projection, America will continue to trade its amber waves of grain for green rows of corn.
Neither the government nor the automobile industry shows any signs of cutting ethanol off. Last year, Congress extended ethanol tax credits and import tariffs in the Obama-GOP tax bill, the Environmental Protections Agency agreed to increase the amount of ethanol blended into each gallon of gasoline from ten to 15 percent, and General Motors, Ford, and Chrysler have all pledged that 50 percent of their production will support an 85 percent ethanol-gasoline blend by next year. Forbes