The man who dared to question ethanol

By Andrew Martin
Published: July 13, 2008

It wasn't too long ago that a loose coalition of anti-ethanol forces was bemoaning the futility of its fight.
After failing to block huge new ethanol mandates in the Senate last December, Jay Truitt, until recently the chief lobbyist for the National Cattlemen's Beef Association, complained about the "fervor" and "spirituality" that surrounded ethanol on Capitol Hill.
"You can't get anyone to consider that there is a consequence to these actions," he said, adding, "We think there will be a day when people ask, 'Why in the world did we do this?' "
That day has arrived sooner than Truitt, or most anyone else, anticipated.
Of course, much of the turnabout is attributable to relentless price increases at the grocery store that have caused many people to argue that the land used to grow corn for ethanol should be used for food instead.

But the changing perceptions about ethanol have been helped along by the most unlikely of characters, a bearded and mild-mannered economist with a dry sense of humor and an encyclopedic knowledge of the arcana of American farm policy.
Until January, Keith Collins was the longtime and widely respected chief economist for the Department of Agriculture. In that position, he was a frequent booster of government policies that encouraged biofuel production.
In the months after his departure, he was hired by Kraft Foods Global to analyze the impact of biofuels on food prices. He delivered a stunning, and unexpected, roundhouse to his former employers.
The Bush administration had said biofuels were a minor factor in rising food costs. In a May 1 press conference, Edward Lazear, chairman of the White House Council of Economic Advisers, said, "The bottom line is that we think that ethanol accounts for somewhere between 2 and 3 percent of the overall increase in global food prices."
A month later, in Rome at a United Nations conference on the food crisis, the agriculture secretary, Ed Schafer, echoed Lazear's analysis in defending American biofuels policy.
But Collins pointed out that the administration's analysis was more like a back-of-the-envelope calculation, and that it hadn't accounted for the impact of biofuels on crops other than corn. The push for ethanol has led farmers to grow more corn and less of other food crops, one factor in rising prices for commodities like wheat.
Based on his own analysis, Collins maintains that biofuels have caused 23 to 35 percent of the increases in food costs. (The ethanol lobby dismissed Collins's analysis as a "Krafty use of corn demand data.")
"I looked at a little bit more recent period," said Collins, who appears uncomfortable in his role as a hired gun and treads carefully so as not to insult his former employer. "I was looking at a period when corn going into ethanol was rising much faster than what they looked at."
His move to Kraft came amid an aggressive effort by the Grocery Manufacturers Association to change perceptions about ethanol while food prices were high. The association hired the Glover Park Group, a politically wired public relations firm in Washington, to help it develop a more effective strategy. Scott Faber, lobbyist for the Grocery Manufacturers Association, declined to comment.
The Glover Park Group wrote in its proposal to the association, "We must obliterate whatever intellectual justification might still exist for corn-based ethanol among policy elites."
It also recommended identifying and recruiting "third-party validators."
Collins said he didn't believe his hiring was part of an anti-ethanol campaign. Instead, he said, he was simply asked by Kraft Foods for his thoughts on biofuels' impact, and he ultimately wrote those up in a 34-page paper.
He also notes, correctly, that the turnabout in the ethanol debate has a lot more to do with relentless price increases than with PR strategists and his remarks.
"High prices are the dominant factor," Collins said. "Without that, this coalition would not have gotten the legs they have gotten."
Nonetheless, his criticism of the administration's analysis was closely followed by a more thorough analysis from the Department of Agriculture. In comments made before a Senate subcommittee last month, Joseph Glauber, Collins's successor, said the impact of biofuels on food prices was actually closer to 10 percent; the previous analysis had neglected to consider biofuels' impact on soybeans, he said.
In an interview, Glauber said his analysis simply looked at a broader set of assumptions than the earlier one by the administration; for instance, he included the impact of soybean-based biofuels on food prices. While saying he might "quibble" with some of Collins's assumptions, he said the analyses were similar.
"It just goes to show people have different ways of portraying these numbers," he said. "I don't think these analyses are all that different."
Even so, Representative Jeff Flake, Republican of Arizona, has asked the USDA inspector general to investigate why such an error was made and perpetuated. "It is unfortunate that two high-ranking officials from the same agency have made such incompatible fact-based statements," Flake wrote in a June 26 letter to the inspector general, adding that the USDA "must be able to produce and disseminate clear and accurate information, particularly when it pertains to the culpability of U.S. policy in skyrocketing food prices."
Collins said his remarks did not contradict his work at the Agriculture Department. Back then, he said, he never anticipated that corn would hit $7 a bushel.
"We expected stronger prices for corn," he said. "If we got the prices we anticipated — high $3s — everybody would be happy. Ethanol would be cruising along just fine."