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The myth of the "tortilla effect". Ethanol prices don't affect food prices

Some voices claimed that the widespread use of ethanol had made the price of corn so expensive that Mexicans had to pay more for it. Whereas corn is really basic in Mexican kitchens and the price was raised a few months ago, it yet has to be proven that it was because of corn-based ethanol.

Such a thing is announced by Ethanol Across America, a campaign of the Clean Fuels Foundation (which is paid by ethanol producers, among others). They affirm that the impact of corn ethanol of food prices is minimal, if any. "America's farmers are the most efficient and productive in the world" said Senator Nelson (D-NE), Chairman of this campaign. "With this new demand will come increased yields and a likely leveling of prices ... We are also working hard to diversify our biofuel production by utilizing new feedstocks that range from specialty energy crops to waste materials."

The brief of the campaign also affirms that although corn prices have doubled, according to the U.S. Commerce Department's Consumer Price Index (CPI), food costs have increased just 2 percent, which is less than their historical average of 2.9 percent per year.

Pump prices are also a key argument in this campaign and uses Nebraska (where E10 to E85 pumps offer lower prices) as a good example. A final argument is that ethanol is one of the paths the US must follow to lower dependence on foreign oil.


[Source: Ethanol Across America]

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