1. The Impacts of Food-to-Fuel Policies on Food Prices Scott Faber Vice President for Federal Affairs Grocery Manufacturers Association

2. Global Food Prices Rising FAO: “Agricultural commodity prices rose sharply in 2006 and 2007 and continued to rise even more sharply in the first three months of 2008.”

3. Global Food Prices Rising FAO: “For many of the 800 million people who are already affected by chronic hunger, higher food prices can be devastating. Already their ranks are being swelled by many other millions of poor people who now find themselves unable to buy the food that their families need for a healthy life. It is not surprising that this is provoking social unrest across the developing world.”

4. Sources of Food Inflation Changing Weather Patterns Export Restrictions Changing Commodity Markets Weak Dollar Energy Prices Global Demand Food-to-Fuel Mandates

5. Demand for Coarse Grains Outpacing Production

6. Annual Growth in Production is Slowing USDA-ERS: “Between 1970 and 1990, production rose and average of 2.2 percent per year. Since 1990, the growth rate has declined to about 1.3 percent... Projections for US and world agriculture see the rate declining to 1.2 percent per year between 2009 and 2017.”

7. Grain Stocks Falling Lower 2007/2008 Global Grain Stocks-to-Use at Record Low

8. What is the role of ethanol? IFPRI: Demand for ethanol accounted for 30 percent of increase in grain prices between 2000 and 2007. USDA-ERS: Between 2002 and 2007, ethanol “accounted for 30 percent of the growth in wheat and feed grain use.” USDA-WASDE: Half of increased global grain use in last two years attributed to US production of corn ethanol. USDA-OCE: US food-to-fuel production increased IMF global food index from 40 to 45%

9. U.S. Ethanol Production: 1980 to 2007 6.5 billion gallons in 2007 (24% of U.S. corn crop)

10. Projected Source: USDA-ERS, projections derived from USDA yield projections and EISA mandates Ethanol’s Growing Share of the U.S. Corn Crop

11. Recent Food Inflation – 5%

12. Corn Futures – May 2008

13. Record High Farm Prices into 2008 Corn $ per bushel Source: National Agricultural Statistics Service, USDA Wheat Soybeans

14. Note: Food prices rose at a 6.1% annualized rate from January-April ‘08

15. Source: Energy Information Administration, Energy Independence and Security Act of 2007 Energy Imports and Displacement

16. Source: Energy Information Administration, Energy Independence and Security Act of 2007 Gasoline Usage and Displacement