The American Enterprise Institute reported in January that the Renewable Fuel Standard (RFS) mandates that at least 37 percent of the 2011-12 corn crop be converted to ethanol and blended with the gasoline that powers our cars. This ethanol mandate is causing corn demand to outstrip supply by more and more each year, creating a vulnerable market in which even the slightest production disturbance will have devastating consequences for the world’s poor.
That production disturbance now looks to be heading our way. The drought this year might reduce corn harvests by as much as 25 percent below the government’s June forecast. This year’s crop yield could be the worst in 15 years, and corn prices have already hit record high levels.
It is time for the federal government to stop requiring that our cars burn food.
Markets work wonders for the world’s poor.
Governments on the other hand…….