Current fluctuations in food prices from increased demand for corn for ethanol do not represent a permanent competition between fuel demand and food security.
Food prices increased 4.1 percent in the United States from June 2006 to June 2007 due not only to increased corn prices, but also increased costs of oil, worldwide weather-related disruptions of food (droughts and freezes), and contamination scares. The costs of all goods, excluding energy and food, rose 2.2 percent in the same period, according to the U.S. Department of Labor Bureau of Labor Statistics (BLS), which compiles the Consumer Price Index (CPI, July 2007 CPI Release PDF).
According to BLS, rising energy prices accounted for 48 percent of the overall rise in the CPI, while food prices accounted for 17 percent.
According to Iowa State University’s Center for Agricultural and Rural Development (CARD), traders have anticipated higher prices and have built them into futures contracts. Most of the anticipated price changes have already shown up in market prices (CARD Publication: Emerging Biofuels: Outlook of Effects on U.S. Grain, Oilseed, and Livestock Markets).
Further, higher corn and crop prices increase income for farmers throughout the world. According to the UN-Energy report “Sustainable Bioenergy : A Framework for Decision Makers(report in PDF), “As biofuels absorb crop surpluses in industrialized countries, commodity prices will rise, increasing income for farmers in poor countries.”
Biotechnology is helping farmers throughout the world to increase productivity. Biotech crops were grown by some 10.3 million farmers in 22 countries in 2006. Ninety percent of these farmers (9.3 million) were resource-poor farmers from 11 developing countries. Planting of biotech crops in developing countries grew by 13 percent between 2005 and 2006.