Obama, McCain and the price of food

McCain attacks Obama for supporting tariffs that raise the cost of groceries. If he's talking about Brazilian ethanol, he might have a case.

Published June 4, 2008 5:19PM (EDT)

Does Barack Obama support tariffs that are responsible for high food prices in the U.S.?

Writing at the blog Economists for Obama, DonPedro seized upon a line from John McCain's speech in New Orleans Tuesday night, in which the senator from Arizona made precisely that accusation: "Sen. Obama supports the tariffs that have led to rising grocery bills for American families." (Thanks to Mark Thoma for the link.)

DonPedro contends that "this is wrong on two points."

First, Obama doesn't support any such tariffs that I know of, although I imagine someone in the McCain campaign would try to argue (falsely) that Obama's criticism of particular aspects of trade agreements means that he supports food tariffs.

More importantly, no one thinks tariffs are behind the increase in food prices. As Obama noted in an interview a few weeks ago, there are many factors behind the rise in food prices. These include rising oil prices (which affect fertilizer and transport costs), poor harvests this year in a few countries, rising demand in Asia, and the rising demand for biofuels, which has been driven by subsidies in the U.S. and elsewhere. I've read many studies on this topic in recent months, and no one has suggested that food prices in the U.S. have increased because of U.S. tariffs.

In general, DonPedro is correct. U.S. tariffs are not a primary factor pushing food prices.

But there is one tariff, which Obama supports and McCain opposes, that one can argue plays at least an indirect role in food prices. And that's the tariff on sugar-based ethanol.

At present the U.S. imposes a 54 cent per gallon tariff on imports of sugar-based ethanol. This is primarily at the behest of the corn lobby, because American corn-based ethanol cannot compete against Brazilian sugar-cane-based ethanol. Obama has campaigned in the past for the tariff, and voted for the recently passed Farm Bill, which keeps the tariff in place for two more years. McCain opposes the tariff, and opposed the Farm Bill, and historically has criticized government support of the ethanol industry, except for a short period toward the end of last year, when he was busily pandering to Iowa caucus voters.

Exactly how much the diversion of corn into ethanol is affecting global grain prices is a difficult question to answer. The Bush administration claims that biofuels are only responsible for 3 percent of the overall rise in grain prices -- other estimates assert far higher numbers. But wherever you draw the line, it is undeniable that the tariff on imports of Brazilian ethanol artificially props up the price of corn-based ethanol, and by extension, contributes in some real way to the rise in grocery prices.

DonPedro cites a recent interview in which Obama said that "if it turns out that we've got to make changes in our ethanol policy to help people get something to eat, then that's got to be the step we take," as evidence that Obama might be willing to rethink his position. It would be nice to think so -- albeit out of character for a senator who represents a Midwestern corn state, and who is desperately eager to turn Iowa into a blue state in the general election. But for now, the record is pretty clear: Obama has supported the tariff, and McCain has opposed it.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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2008 Elections Barack Obama Globalization How The World Works John Mccain