Most US ethanol is made from corn. The dispute over ethanol promotion pits
states such as Iowa that benefit from higher corn prices – and in some
cases are swing states in the election – against livestock-raising
states such as Texas that are helped by lower corn prices.
The UN intervention will be seized upon by state governors, lawmakers and the meat and livestock industry, who have expressed alarm at surging prices for corn. Members of the Group of 20 leading economies – including France, India and China – have already expressed concern about the US ethanol policy.
The US is poised to divert around 40 per cent of its corn into ethanol because of the Congress-enacted mandate despite “huge damage” to the crop because of the worst drought in at least half a century, José Graziano da Silva, director-general of the UN’s Food and Agriculture Organisation, warned.
“An immediate, temporary suspension of that [ethanol] mandate would give some respite to the market and allow more of the crop to be channelled towards food and feed uses,” he wrote in an opinion piece in the Financial Times.
However, some analysts argue such a suspension could have a lower impact on food prices than expected. Even disregarding the mandate, US refiners need billions of gallons of ethanol to meet environmental specifications for their gasoline. Moreover, ethanol is now a huge component of global energy supplies and the suspension of the mandate could push up oil prices.
Read more: http://www.ft.com/intl/cms/s/0/8808b144-e240-11e1-8e9d-00144feab49a.html#axzz238rc6UgW
The UN intervention will be seized upon by state governors, lawmakers and the meat and livestock industry, who have expressed alarm at surging prices for corn. Members of the Group of 20 leading economies – including France, India and China – have already expressed concern about the US ethanol policy.
The US is poised to divert around 40 per cent of its corn into ethanol because of the Congress-enacted mandate despite “huge damage” to the crop because of the worst drought in at least half a century, José Graziano da Silva, director-general of the UN’s Food and Agriculture Organisation, warned.
“An immediate, temporary suspension of that [ethanol] mandate would give some respite to the market and allow more of the crop to be channelled towards food and feed uses,” he wrote in an opinion piece in the Financial Times.
However, some analysts argue such a suspension could have a lower impact on food prices than expected. Even disregarding the mandate, US refiners need billions of gallons of ethanol to meet environmental specifications for their gasoline. Moreover, ethanol is now a huge component of global energy supplies and the suspension of the mandate could push up oil prices.
Read more: http://www.ft.com/intl/cms/s/0/8808b144-e240-11e1-8e9d-00144feab49a.html#axzz238rc6UgW
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