Heritage Foundation attacks ethanol policies

The Heritage Foundation Blueprint for Agriculture includes a lengthy chapter on U.S. biofuels policy and the renewable fuel standard (RFS). Heritage concludes that ethanol and other current biofuels are harmful to agriculture, the environment, and consumer.Heritage claims the U.S. biofuels policy “is a case study in the unintended consequences of government intervention.” For example, biofuels have created higher livestock prices for livestock farmers and ranchers. Heritage suggests biofuel policies, over a 30-year time frame, have diverted over $35 billion in taxpayer money to agriculture. It goes on to conclude renewable fuel mandates have assisted corn growers at the expense of livestock producers. (I suspect my friends in the livestock community are not complaining about corn prices now.)The report claims “The renewable fuel standard has certainly contributed to increased prices [in food].” To support this charge, Heritage quotes the USDA Economic Research Service, which writes, “Increased corn prices draw land away from competing crops, raise input prices for livestock producers, and put moderate upward pressure on retail food prices.”Heritage also claims that diverting food to fuel has hurt both rural America and the world’s poorest citizens. I suspect there is some dispute over this assertion.The report relies on the 2012 summer drought to assert that existing subsidies for ethanol and other biofuels “needlessly” diverted food to fuel. Although the report does accurately state “The magnitude of the ethanol mandate’s effect on corn prices and overall agricultural products is difficult to determine, partly because of the uncertainty of estimates regarding how much ethanol would be used for fuel absent a mandate…”