New GDAE report: U.S. Ethanol Expansion Cost Mexico Billions in Higher Import Prices

May 16, 2012

GDAE, 5/16/12

GDAE study estimates that ethanol added $1.5-$3.2 billion from 2006-11

How much have U.S. ethanol policies pushed up corn prices? And how much has these higher prices cost developing countries dependent on imports for their staple foods? According to a new Working Paper by Timothy A. Wise, Research and Policy Director at Tufts University’s Global Development and Environment Institute (GDAE), it cost Mexico between $1.5 and $3.2 billion from 2006 and 2011, when U.S. corn ethanol production expanded dramatically and food prices rose to alarming levels.

The Working Paper, “The Cost to Mexico of U.S. Corn Ethanol Expansion,” was released today in Mexico City on the eve of a key meeting of vice ministers of agriculture from the G-20 countries. They meet to set the G-20 agenda on food security in advance of the G-20 summit June 18-19 in Los Cabos, Mexico.

“Mexico is the chair of the G-20,” notes Wise. “The government has the opportunity to take a strong lead in that powerful body to address the underlying causes of the food crisis. Curbing the expansion of biofuels is crucial to that effort. Mexico bans the use of corn for ethanol to protect food security. Our study shows that Mexicans themselves have suffered from less restrictive U.S. biofuels policies.”

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