“Food vs Fuel” Argument is False

Here is some interesting data that shows that the food vs fuel argument is false.

2015 (Projected)
Harvested corn
acres & yield
(129.3 bu/A)
(149.1 bu/A)
(151.1 bu/A)
(180 bu/A)
Total Corn Supply
(prod = carry in)
10,573 Mbu
12,512 Mbu
14,393 Mbu
17,232 Mbu
Ethanol per Acre
350 gal/A
404 gal/A
435 gal/A
575 gal/A
Ethanol produced
2.96B gal
5.8B gal
8.3B gal
15.3B gal
Corn used for
1,093 M bu
2129 M bu
3010 M bu
4,695 M bu
Corn Supply
(Less Used for Ethanol)
DDG Disp (M bu eq)
9,669 M bu
10,898 M bu
12,175 M bu
13,989 M bu


Note the bottom line. AFTER corn crop removal for ethanol production the US produced a net of 9.7 million bushels in 2002, 10.4 million bushels in 2006, and 12.2 million bushels in 2007. 

Thus despite the growth of the corn ethanol industry (or actually because of it, as I’ll explain below) the net corn food product of the USA increased 17% between 2006 and 2007, and 26% since 2002. Overall, US farm exports are up 23%.

The reason why this is so is because agriculture is not a zero sum game. Only about 30% of US arable land is actually being farmed (it’s more like 15% in the third world). As a result of the ethanol program, the price received by farmers increased over the past year from $3.50/bushel to $5 per bushel. (There are 56 pounds of corn in a bushel – that’s actual grain, not corn on the cob. So $5/bu corn is $0.09/lb). By increasing the price the farmer gets from $0.07/lb to $0.09/lb, the program caused a great increase in the amount grown, both by increasing acreage and intensity of effort, and thus yield. This puts more corn on the market, and actually acts as a factor to decrease the price that grain merchants can charge for the corn, since they need to sell it all. (Adam Smith discusses this very issue in The Wealth of Nations.)

However, the retail price of corn, as well as all other food commodities, is being driven up an average of 4% by increased fuel prices, which are up 40% this year, as well as increased demand from China and India. The increased fuel prices affect retail food prices by increasing the price of production (of both agricultural products and especially fisheries), transport, wages, and packaging, which are the majority of cost of retail food. (At $5/bu, a $2.50 box of cornflakes, which contains 15 oz or corn, contains corn that cost 8 cents when bought from the farmer.

Robert Zubrin
author “Energy Victory

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