More than 40% of U.S. corn is now consumed in the production of ethanol. With
the United States by far the world’s largest producer and exporter, this represents an
estimated 15% of global corn production. The growth in U.S. ethanol production has
been dramatic and quite recent, stimulated by high oil prices, government subsidies and
tariff protection, and a mandate for increasing biofuel use that has nearly 10% of U.S.
gasoline sales accounted for by ethanol.
Biofuels expansion in general, and U.S. corn ethanol expansion in particular, are
widely seen as among the major contributors to the recent surge in food prices. By 2010,
biofuels were consuming 6% of global grain consumption, up from negligible amounts
just a decade earlier. While debate continues over the extent of the biofuel impact on food
prices, there is broad consensus that the expansion, with its direct consumption of food
and feedstocks such as corn and its competition with food and feed crops for land, has
been one of the important contributors to global food price increases. These, in turn, have
had a direct impact on the food-import bills of developing countries, many of which have
become heavily dependent on outside sources of basic food commodities in the last 25
years. At the individual level, of course, higher international prices for agricultural
commodities have contributed dramatically to hunger and caused food riots in many
countries