MEDIA CONTACT
Illinois Farm Bureau
John Hawkins, News Service Director
309-557-2237
JHawkins@ilfb.org

PRESS RELEASES
IFB: No Need to Rollback RFS – April 28, 2008

AUDIO & VIDEO
IFB President Discusses Food Prices – April 11, 2008
Ethanol's Impact on Food Prices – April
Don't Shy Away From Ethanol – April
Biotech is Answer to Crop Shortages – April
Export Bans Causing Problems – April
Futures Markets Affect Food Prices– April

GOOD QUESTIONS
FACTUAL ANSWERS

So what if ethanol weren’t part of our nation’s energy solution?

You would be paying a lot more at the pump. Iowa State University researchers say that from 1995 to 2007 ethanol caused retail gasoline prices to drop from 29- to 40-cents per gallon.

At today’s rate of gasoline usage, a 35-cent drop in the price of gas saves U.S. consumers about $50 billion per year. For someone driving 10,000 miles per year with a vehicle that gets 20 mpg (at today’s regular unleaded prices of $3.50 per gallon), the “ethanol savings” would be $175 per year.

Was ethanol solely responsible for the run up in corn prices?

No, in fact University of Wisconsin-Madison researchers discovered that while ethanol production was a part of the increase in corn prices last year, it wasn’t the most significant factor.

UW research found that the run up in ethanol production accounted for 41¢ of $1.22 increase in corn prices. Exports accounted for another dime of the increase. So what was the big factor? The U of W study concluded that speculative trading by outside investors accounted for the majority of the run up in corn prices.

How strong is the link between commodity prices and the prices we pay for our food?

Respected agricultural economists Informa Economics concluded in Dec. 2007 that there has “historically been very little relationship between corn prices and consumer food prices.”

“In summary, the statistical evidence does not support a conclusion that the growth in the ethanol industry is driving consumer prices higher.”

Only 4% of the change in the food CPI is “explained” by fluctuations in nearby corn futures prices.

There is no one factor but a “complex and interrelated set of factors that contribute to food prices.”

If we get rid of all or part of the renewable fuels standard, won’t food prices suddenly drop?

The Governor of Texas might think so, but the folks at Texas A&M University would respectfully disagree. Texas A&M agricultural economists concluded that the underlying force for driving changes in the agricultural industry, and the economy as a whole, were higher energy costs – in the form of $100+ per barrel oil.