Acton Commentary

'Big Corn' and Unintended Consequences


Ronald Reagan once said that the most terrifying words in the English language are, “I'm from the government and I'm here to help.” His one-liner immediately comes to mind when looking at the problems behind the federal government's campaign to boost production of corn-based ethanol with a massive, 51 cent per gallon subsidy. Ethanol and other bio-fuels are advertised as one of the main cures for our oil-thirsty economy. But it's clear that the ethanol boom, with a major assist from Washington, is succeeding in simultaneously raising both fuel and food prices.

With more than 20 percent of corn now dedicated to ethanol production, the USDA is projecting a record U.S. corn crop in 2007 — along with record prices. Outside the United States, the unintended consequences of ill considered policies promoting ethanol and other bio-fuel crops are already in full view. The poor, of course, are hardest hit.

In Mexico, where corn is a staple, rapidly rising prices for tortillas has sparked open revolt. Tortilla prices skyrocketed more than threefold last year. In fact things were so bad protestors took to the streets in Mexico City to fight back against the steep surge in prices, compelling the normally free market minded President Felipe Calderon to cap prices at 78 cents per kilogram.

Religious leaders are speaking out. In March, Roman Catholic bishops in Brazil warned that a rapid increase in ethanol production based on sugar cane could lead to widespread deforestation, massive relocation of workers and their communities, and harsh working conditions for cane cutters. Analysts predict that Brazil, the world's largest exporter of ethanol, may increase ethanol production as much as 40 percent in the next four years. “We are going to turn the country into a huge cane (plantation),” said Cardinal Geraldo Majella Agnelo. In Colombia, Christian aid organizations say armed groups are driving peasants off their lands to make way for plantations of palm oil, another biofuel. Acreage dedicated to production of the palm oil tree has more than doubled in the last four years.

Religious leaders who are demanding action on global warming may soon be demanding action on some of the quick fixes put in place in the name of “renewable” energy sources like ethanol. I attended an Evangelical Wesleyan seminary where the global warming scare rapidly gained exposure in chapel and in the classrooms. Consumerism — exemplified by profligate energy use — is considered one of the greatest sins of the West by many religious leaders. One professor declared the polar bears were groaning with creation (a reference to Romans 8:22) because of the melting ice caps. Several professors admonished U.S. dependence on oil and called for repentance. Now that Big Oil has been demonized in many seminaries, can Big Corn be far behind?

Religious leaders should be thinking about the economic impact of ethanol, which goes far beyond the price of tortillas. Ethanol is expensive to produce, has contributed to a rise in gasoline prices, and has its own pollution problems. It requires a lot of fertilizer, fresh water, and productive farm land. And, because of corrosive properties that make pipeline transportation problematic, it takes a lot of trucks to haul it.

Americans may be able to afford their corn on the cob for this year's Fourth of July celebration, but price increases are increasingly noticeable for a wide array of foods. That's because of the widespread use of corn products in U.S. food, less land for other crops due to an increased need for corn fields, and the higher cost of corn feed for livestock. In the first quarter of this year, food prices rose at an annualized rate of 7.1 percent, according to the Bureau of Labor Statistics. Think of it as a regressive tax on the consumer.

Today's religious leaders would do well to look to the example of their forbears. John Wesley, the 18th century Anglican minister who founded Methodism, was a man of practicality who published articles, tips, and advice for helping the poor reduce costs. Wesley's ministry reached out especially to the kind of poor and marginalized hit extremely hard by rising food costs. It's hard to imagine that John Wesley would side with the unintended consequences of environmental quick fixes and against the poor and needy of the world — especially when the environmental quick fixes are so impractical or destructive.