Grocers to start lobbying campaign against biofuels; some crying foul

ST. LOUIS -- The rhetoric is set to heat up this summer over the use of crop-based fuels like ethanol as a number of activist groups will protest biofuels as a key reason for rising food costs. While the voices might be many, the source behind them is a single food lobbying group.

The Grocery Manufacturers Association plans a high-profile campaign against biofuels that will draw together diverse groups like hunger-prevention advocates and environmental activists. Documents leaked to the media this month show the GMA has hired the high-end Washington lobbying firm Glover Park Group to coordinate the campaign.

Farm state senators -- from Iowa's Charles Grassley to Missouri's Kit Bond -- are crying foul. They say food companies should support farmers who are seeing high corn prices for the first time in years. They also say the campaign is misleading, and that ethanol makes only a tiny contribution to rising food prices.

"They need a scapegoat that can justify the increase in the price of food," Grassley said. "Raising the price of food is traumatic."

GMA spokesman Scott Openshaw said the group wants Congress to revisit its support for the biofuels industry, although he agreed with Grassley that ethanol isn't the only factor driving up food prices. There are also droughts, export bans and rising transportation costs to blame.

"What we've said is that unfortunately, Congress can't control any of those," Openshaw said. "But the one thing that Congress can control and Congress can have an impact on is the food-to-fuel mandates."

The grocer's spat over ethanol mandates -- which require the U.S. to use billions of gallons of renewable fuel annually -- reflects a division that is deepening within the world of agribusiness lobbying. While farm and food interests were able to pass a veto-proof farm bill this year, different groups have been at odds over the use of biofuels.

On one side are grain growers, represented by lobbying outfits like the National Corn Growers Association. Farmers have seen prices for their crops climb for the first time in years because of growing demand from ethanol and biodiesel plants since Congress mandated renewable fuel use in 2005.

Rising grain prices have put a pinch on meat producers, whose biggest cost is feed for chicken, pigs and cattle. The American Meat Institute has taken a stand against biofuels mandates, launching a Web site called "Balanced Food and Fuel" that is filled with gloomy stories about rising food costs and the effect of biofuels.

In fact, the truth is somewhere in the middle regarding ethanol's contribution to rising food prices, said Scott Irwin, a professor of agriculture at the University of Illinois at Urbana-Champaign. While the ethanol industry has pushed up the price of corn, that increase does not explain the total rise in food costs, he said.

"A dominant factor is the price of crude oil, and the way energy prices feed through everything in the economy," Irwin said.

Still, the new GMA campaign sets its sights squarely on ethanol. A nearly 20-page memo from the Glover Park Group lays out a detailed national campaign aimed at turning public opinion against the use of biofuels, and pressuring federal legislators to turn back ethanol mandates.

Openshaw wouldn't comment on the details of the plan, but confirmed the GMA will be pressing its case this summer. The memo's contents were reported by the Washington D.C. newspaper Roll Call earlier this month.

The March 6 memo says the GMA should mobilize groups that would oppose biofuels, driving them to pressure members of Congress that might be worried about re-election.

"... we need to spark real demonstrations of popular discontent with increasing food prices," the memo says. "Our strategy depends on sparking a high-volume, intense political battle."

The memo notes that there are plenty of facts to back up the anti-ethanol argument. But it also seems to give a sly wink to the power of good old-fashioned politicking.

"While political debates are never won or lost solely on the merits, it is helpful to have the facts on your side," it said.

Grassley said he's not bothered by the strategy laid out in the memo, but the fact that grocers would choose to go after the burgeoning biofuels industry.

"They ought to have a close working relationship with farmers," he said. He sent a letter to the Iowa Retail Federation and the Iowa Restaurant Association asking them to protest the GMA effort, which he describes as a "smear campaign."

Grassley took solace from a U.S. Department of Agriculture briefing last week, during which Agriculture Secretary Ed Schafer downplayed the effect of biofuels on food prices. White House economic advisers said ethanol made from corn is responsible for just 2-3 percent of the overall increase in global food prices, which are up more than 40 percent this year over last year.

But opposition to the industry appears to be growing, even as the GMA campaign is getting under way.

Texas Sen. Kay Bailey Hutchison, a Republican, introduced a bill this month that would freeze the current mandate to produce 9 billion gallons of ethanol this year, cutting off a potential increase that could have ethanol plants pumping 15 billion gallons by 2015.

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On the Net:

Grocery Manufacturers Association: www.gmabrands.com

The Glover Park Group: www.gloverparkgroup.com

National Corn Growers Association: www.ncga.com