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FOOD & FUEL: Global food crisis fact sheet

There has been considerable international discussion over the past several
months concerning the impact of ethanol on the world food supply. Corn-based
ethanol is often at the center of that debate and is the target of numerous
campaigns directly blaming higher food prices on the increased demand and
production of the alternative fuel source.

Fact: Studies show that only 4 percent of the change in the Consumer Price
Index (CPI) is directly related to corn prices. The balance of the cost of rising
food prices is due to marketing, advertising and transportation. Source: Consumer
Federation of America (CFA)

Hunger is indeed a world-wide calamity, and it is distressing to think that rising


food prices have impacted the budgets of humanitarian organizations around
the globe. Americans have always responded to humanitarian crises around the
world, and we will continue to respond, for the factors behind rising food prices
and shortages can never be completely eradicated.

GLOBAL ISSUES

• The cost of transportation - not food - now represents 65 percent of the total expenditure for the largest U.S. emergency
food aid program. Source: The Government Accountability Office, GAO

• The economy we participate in today is a global economy, affected directly by factors around the globe. A host of
interrelated factors drive supply and demand, determining price and quantity of products sold in the marketplace.
Factors such as weather conditions (drought, floods, etc.) growing populations, expanding wealth, and industrialization
in countries such as China and India all contribute to higher prices of food and fuel.

• Higher food prices are directly affected by the need of developing countries to feed and fuel their populations. This
means that both here in the U.S. and worldwide, there is increased demand for current commodities and food supplies,
such as corn, rice, wheat, and oil. By growing a portion of our energy here at home with renewable resources such as
corn, switchgrass and citrus, long-term we can help reduce the need for foreign oil and the high costs associated with
this nonrenewable energy source.

• Global wars, population growth, transportation costs, increased labor costs, product packaging costs, fuel costs and
a myriad of other factors directly and indirectly have led to higher food prices. For example, the multi-million dollar
commercials you see during the Super Bowl for your favorite snack food, is paid for through the price you pay at the
grocery store. Source: International Food Policy Research Institute

• The demand for corn used in food products has remained relatively flat for over 15 years with less than 10 percent of the
corn crop being used in food. It is used as a main ingredient in relatively few food items, and instead appears mostly as
a minor ingredient in food products in which it is present. This means that the demand for corn in the food industry is
stable and easily met. Acres are not being diverted from food-grade corn to field corn for ethanol production. Source:
National Corn Growers Association and Texas A&M University

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