Half-Baked Ideas

Cindy Zimmerman

Bakers are blaming ethanol for higher wheat prices and demanding changes in the ethanol policy to “Save Our Wheat,” but their claims are “half-baked,” according to ethanol industry officials.

“The idea ethanol production is the driving factor behind high wheat prices is half-baked,” said Renewable Fuels Association President Bob Dinneen. “American farmers increased their wheat production in 2007 at a time of poor harvests and surging demand around the globe. To single out the American ethanol producer ignores the facts.”

wheatLynn Schurman, president-elect of the Retail Bakers of America, was one of the “Band of Bakers” who marched on Washington last week urging agriculture officials and members of congress to take action against rising wheat prices that are straining small bakeries.

She is quoted by Minneapolis media as saying, “Right now less acreage is going into wheat because more people are growing corn and providing corn for the ethanol market.”

That statement is patently false. In fact, farmers planted more than 60 million acres of wheat last year, up more than 3 million acres from 2006. According to the year-end crop production report from USDA’s National Agricultural Statistics Service, 2007 saw the highest number of wheat acres planted in the past four years.

The American Bakers Association is calling on Congress and the Bush administration to implement it’s Three Point Plan to “alleviate the commodity crisis,” one point of which is “Elimination of the ethanol import tariff and temporary waiving of ethanol production limits.” (What they actually mean here is waiving the yearly renewable fuel standard requirements for ethanol production.)

However, that action will do nothing to address the two major factors driving the wheat market today, which are the consecutive droughts in Australia, a leading wheat producer and exporter, and growing global demand. A recent article in the New York Times noted, “Now [wheat] prices have more than tripled, partly because of a drought in Australia and bad harvests elsewhere and also because of unslaked global demand for crackers, bread and noodles. In seven of the last eight years, world wheat consumption has outpaced production. Stockpiles are at their lowest point in decades.”

It is true that wheat prices are higher, but it is incorrect to place the blame on ethanol causing farmers to switch from planting wheat to corn.

Ethanol, News, RFA