And people wonder why U.S. foreign aid is "ineffective!" There is no logic to U.S. policy. On the one hand, we give food aid directly to hungry people, and technical assistance to farmers in developing countries to increase their quality, yields and food security, (see Feed the Future); but on the other hand, we increase the price of this staple food and feed product for the same developing countries. Not only that, we spend $700 billion a year on our military while U.S. farm policy makes conflict-torn countries more unstable and dangerous. Says Wise:
As I showed in my recent study, "The Costs to Developing Countries of US Ethanol Expansion", the US ethanol programme pushed up corn prices by up to 21 per cent as it expanded to consume 40 per cent of the US harvest. This price premium was passed on to corn importers, adding an estimated $11.6bn to the import bills of the world's corn-importing countries since 2005. More than half of that - $6.6bn - was paid by developing countries between 2005 and 2010. The highest cost was borne by the biggest corn importers. Mexico paid $1.1bn more for its corn, Egypt $727m.Besides Egypt, North African countries saw particularly high ethanol-related losses: Algeria ($329m), Morocco ($236m), Tunisia ($99m) and Libya ($68m). Impacts were also high in other strife-torn countries in the region - Syria ($242m), Iran ($492m) and Yemen ($58m). North Africa impacts totalled $1.4bn. Scaled to population size, these economic losses were at least as severe as those seen in Mexico. The link between high food prices and unrest in the region is by now well documented, and US ethanol is contributing to that instability.
President Obama would do well to cancel RFS. If ethanol fuel standards are what Obama means by an "All of the Above" energy strategy, then I opt for "C. Other."
By Timothy A. Wise
October 10, 2012 | Al Jazeera
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