Ethanol proponents have been vociferous in their counterarguments to corn prices and food price inflation linkage. The arguments are sly, pointing out the price of corn has less effect than the price of oil. (Boy, they better hope oil doesn't drop drastically to test this theory.)
But somewhat harder to refute is the acreage shift ethanol politics are forcing.
Efforts to work out which crops are most environmentally friendly have, until now, focused only on the amount of greenhouse gases a fuel emits when it is burned. Scharlemann and Laurance highlighted a more comprehensive method, developed by Rainer Zah of the Empa Research Institute in Switzerland, that can take total environmental impacts - such as loss of forests and farmland and effects on biodiversity - into account.
In a study of 26 biofuels the Swiss method showed that 21 fuels reduced greenhouse-gas emissions by more than 30% compared with gasoline when burned. But almost half of the biofuels, a total of 12, had greater total environmental impacts than fossil fuels. These included economically-significant fuels such as US corn ethanol, Brazilian sugar cane ethanol and soy diesel, and Malaysian palm-oil diesel. Biofuels that fared best were those produced from waste products such as recycled cooking oil, as well as ethanol from grass or wood.
Scharlemann and Laurance also pointed to "perverse" government initiatives that had resulted in unintended environmental impacts. In the US, for example, farmers have been offered incentives to shift from growing soy to growing corn for biofuels. "This is helping to drive up global soy prices, which in turn amplifies economic incentives to destroy Amazonian forests and Brazilian tropical savannas for soy production." [More]
I wonder how the studies will proceed now that the livestock sector is finally coming to grips with the very real possibility of high corn prices for a relatively long time. If we constrict the meat supply to raise prices necessary for feeder profitability, food inflation could significantly surpass the mild expectations noted in the studies.
Of course, all this carping is way too late. But if the dour forecasts I heard today on the talk shows is any indication, corn farmers rolling in the dough might be advised to speak softly and hide the big lobby stick. A looming recession combined with food inflation and high unemployment isn't the time to demand a government safety net other sectors are perishing without.