Ethanol crops hurting corn prices


Published: Tuesday, January 29, 2008 at 12:37 p.m.
Last Modified: Tuesday, January 29, 2008 at 12:37 p.m.

DES MOINES, Iowa - The nation's fascination with ethanol is pushing food prices upward and raising the specter of potential shortages, according to a report by an environmental think tank.

The country's ethanol push is a "misguided effort to reduce its oil insecurity," according to the Earth Policy Institute. The report released last week suggests the ethanol boom will hit U.S. consumers in their pocketbooks and cause even more far-reaching problems in the developing world.

"One of the consequences of this enormous shift of grain is that hunger and malnutrition, which were supposed to be declining during this period, haven't," said Lester R. Brown, the institute's president and the author of the report. "They are now projecting that the 800 million people (living in hunger) will number 1.2 billion by 2025."

Brown said he believes the rapid rise in corn and grain prices during the biofuel boom is causing a slew of unintended consequences. Besides rising prices, the U.S. will ultimately export less grain, harming nations that rely on imports, he said.

Brown said over consumption will also imperil the world's reserve supplies.

"We've seen world grain consumption exceeding production," Brown said. "We've been drawing down stocks down. Until today, carry-over stocks of grain equal only 54 days of world consumption. That's not much more than pipeline supplies."

In total, the Earth Policy Institute's report offers a harsh view of an industry that has exploded in the Corn Belt. Farmers in the region grew more corn than ever before in 2007, an emphatic response to demands from the ethanol industry.

Dozens of ethanol plants are in operation or under construction in states such as Iowa, Illinois and South Dakota. In Iowa, Gov. Chet Culver has staked millions of dollars in state money to further developing the state's renewable fuel industry.

Advocates for ethanol said that Brown's assessment ignores other factors that affect global food supplies and prices. They said the report wrongly places blame on the ethanol industry.

"To single out ethanol and biofuels and place the blame for all the ills of the world is a terribly myopic approach to a complex issue," said Matthew Hartwig, a spokesman for the Washington-based Renewable Fuels Association.

Hartwig acknowledged that ethanol might bear some responsibility for increased food prices, but said the impact was minimal compared to other issues.

"Oil prices have gone up 40 or 50 percent and it takes a great deal of oil in particular to transport and process food," Hartwig said.

Hartwig also said the emergence of ethanol could offer benefits to farmers in less-developed countries. "They could invest in more of the technology they need to be more productive," he said.

MINNEAPOLIS (AP) With Minnesota's ethanol production expected to more than double by 2011, there's growing concern there won't be enough groundwater to satisfy the industry's needs.

It already happened in Granite Falls, when a new ethanol plant last year depleted the groundwater so much that the plant had to start pumping water from the Minnesota River.

It takes four to five gallons of water to produce a gallon of ethanol at a biofuel plant. Minnesota has 17 ethanol plants in operation, six under construction and 10 more proposed or in the planning stages substantially increasing the possibility of more drains on underground water supplies.

Right now, the industry is consuming about 2 billion gallons of groundwater a year, according to state estimates. The expected doubling of the state's ethanol production would likely mean a quadrupling of the amount of water needed.

At the request of the Minnesota Pollution Control Agency, this week the Minnesota Environmental Quality Board is convening an expert panel to look more closely at groundwater availability and ethanol production.

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