The dramatic rise in food prices coincided with the first wave of expansion of the biofuel industry in the US.
The Covid-19 pandemic and the Russia-Ukraine conflict have raised fears over global food security, despite global grain production continuously rising over the past two decades. Corn is widely cultivated throughout the world, and a greater weight of corn is produced each year than any other grain, with its production growing on average 3.5 percent a year since 2000 to reach a record 1.2 billion metric tons in 2021. However, the world has faced two food crises since 2000, and is staring at a third, partly because the use of corn to produce biofuel has pushed up grain prices. With the fast expansion of the biofuel industry, the United States has become the world’s largest corn biofuel consumer.
Over the past decade, about 40 percent of the US’ total corn production has been used to make biofuel. In fact, the US’ use of corn to make biofuel exceeds Africa’s total corn consumption as food. The world faced the first food crisis from 2005 to 2008. In March 2008, the global crop price index rose to 163.3-1.7 times higher than in early 2005. While rice prices nearly tripled between 2005 and 2008, wheat, corn and soybean prices rose by more than 40 percent. The dramatic rise in food prices coincided with the first wave of expansion of the biofuel industry in the US. In 2005, the then US president George W. Bush signed the Energy Policy Act, which mandates the mixed use of biofuels including bioethanol and biodiesel with gasoline.
In 2006, the US administration announced additional funding to support research and development in bio fuel, and in 2007, it passed the Energy Independence and Security Act to strengthen US energy security. Thanks to favorable government policies, the US’ biofuel industry has been growing rapidly since 2005. According to the US Department of Agriculture, in 2005, domestic biofuel production was 3.9 billion gallons, with 40.72 million tons of corn-14.4 percent of the US’ total corn production-used for biofuel production. In 2007, US biofuel production increased to 10.9 billion gallons, nearly three times that of 2005, and the use of corn to produce biofuel reached 94.21 million tons, accounting for 30.8 percent of the US’ total corn production. Even after the record rise in global food prices in 2008, the production of corn-biofuel in the US continued to increase, exceeding 117 million tons in 2009.
Overall, from 2000 to 2009, the use of corn to produce biofuel rose by 24.7 percent a year on average. In fact, a study by Renmin University of China’s School of Agricultural Economics and Rural Development shows that at least 30 percent of the food price increase between 2005 and 2008 was due to the expansion of the global biofuel industry, especially in the US. The second global food crisis in 2010-12 again was caused by the increasing use of corn to make biofuel in the US. Global food prices shot through the roof again in 2012, with soybean and corn prices rising by over 50 percent, and the amount of corn used to make biofuel in the US reaching 127 million tons in 2010, or 40.4 percent of the US’ total corn production. This means the US used more than 15 percent of the total global corn production in 2010 to make biofuel, which was more than twice the amount of corn consumed as food in North Africa and sub-Saharan Africa. In 2012, the percentage of US corn used to produce biofuel reached 43.2 percent.
