April 10, 2009

Congressional Budget Office Studies Ethanol's Contribution To Last Years Food Price Increases

The Congressional Budget Office has just released a report on ethanol's contribution to last years food price increases.

CBO estimates that from April 2007 to April 2008, the rise in the price of corn resulting from expanded production of ethanol contributed between 0.5 and 0.8 percentage points of the 5.1 percent increase in food prices measured by the consumer price index (CPI). Over the same period, certain other factors—for example, higher energy costs—had a greater effect on food prices than did the use of ethanol as a motor fuel.

So they concluded that ethanol was responsible for 10 to 15 percent of the overall increase in food prices during the period studied. The other 85 to 90 percent of the overall increase came from other factors, such as increased energy costs, the strength of the dollar and increases global consumption of meat.

Source : The Impact of Ethanol Use on Food Prices and Greenhouse-Gas Emissions (PDF)

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