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Ethanol's Success Story May Have Downside
Published on Friday, January 5, 2007 by the Boston Globe
Ethanol's Success Story May Have Downside
As more corn is needed, food costs may rise
by John Donnelly
 

US factories producing ethanol fuel for cars may consume as much as half of the country's corn crop next year -- more than double earlier government predictions -- creating competition for grain stocks that could drive up supermarket prices for cereals, meat, eggs, and dairy products, according to a report released yesterday.

"The world needs a strategy to deal with this unfolding competition between automobiles and people for the grain supply," said Lester R. Brown , president of the Earth Policy Institute , a Washington- based advocacy organization that wrote the report. Brown called for a moratorium of ethanol plants in the United States "so we can catch our breath and determine how much we want to harvest our corn for ethanol."


Photo: The University of Georgia College of Agricultural and Environmental Sciences
Democrats in Congress are expected in the next two weeks to begin a major push for alternative energy, including ethanol, as a way of reducing the country's reliance on foreign oil.

Ethanol plants use corn to create a synthetic form of oil. Feedlot owners, who intensely feed corn to cattle and pigs for four to six months before slaughter, have seen their costs rise dramatically because of ethanol production. The growing competition for corn is expected to create price hikes that will be passed on to consumers who buy anything from milk to pork chops, Brown said.

Ethanol production doubled from 2001 to 2005, and the report said it could double again by 2008 to more than 15 billion gallons, or roughly 6 percent of US auto fuel needs.

The report found that 139 million metric tons of corn will be needed for ethanol by the 2008 harvest season, or roughly half of the nation's crop, according to US Agriculture Department estimates. In February 2006, the Agriculture Department estimated that just 60 million metric tons of corn would be needed for ethanol.

Brown, a widely respected environmentalist and founder of the Worldwatch Institute, which studies global environmental issues, said the Agriculture Department estimate did not account for last year's surge in global oil prices that led to more ethanol production. His research found 116 ethanol plants operating in the United States, 79 more under construction, and another 200 planned.

Already, he said, the price for corn has reached 10-year highs. Consequences, he said, could be far-reaching. Since the US corn crop accounts for one-fourth of all grain exports, a rise in price "could create food riots in low-income areas around the world," he said.

Bob Dinneen , president of the Renewable Fuels Association , a Washington- based lobbying group for the ethanol industry, said Brown's concerns were overblown. Dinneen said increased farming of corn could offset much of the increase in demand for ethanol.

Corn production has risen to an estimated 86 million acres in the last year, up from 76 million acres in 2005, largely because of the demand for ethanol, he said.

"I have more faith in the marketplace," Dinneen said.

Copyright 2007 Boston Globe

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