Sioux Falls Argus Leader, SD
01-05-07
Group links ethanol, hunger
Fuel proponents say food-price fears overblown
By Ben Shouse bshouse@argusleader.com
Ethanol production will raise U.S. meat prices and spark hunger and unrest abroad within a few years, according to a new report that some are calling overblown.
The Washington-based Earth Policy Institute says the country will produce a whopping 15 billion gallons of ethanol in the 2008-09 crop year, based on data it compiled on ethanol plants. The massive expansion would consume nearly half the nation's corn harvest and could push corn prices to $5 a bushel.
"What we're beginning to see is the unfolding of an epic competition between 800 million people who own automobiles ... and the 2 billion poorest people in the world, many of whom are spending more than half of their income on food already," said Lester Brown, the institute's president.
The report exposes a widening rift between biofuels advocates and environmentalists such as Brown, who want new energy alternatives rather than more corn-based ethanol.
The U.S. produced about 4 billion gallons of corn ethanol in 2006, 500 million gallons of it in South Dakota. High oil prices and government support have spurred rapid growth, giving corn growers higher prices and farmer-investors dividends.
But Brown warned that the growth also will increase retail prices of meat and other livestock products. He proposed a government moratorium on new ethanol plants and a faster switch to energy alternatives.
Ethanol proponents called his forecast excessively dire.
Brian Jennings, president of the American Coalition for Ethanol in Sioux Falls, said the market will compensate.
"The surest cure to high prices is high prices," Jennings said. "I don't want to make it sound like everything is perfect, or that everything will move seamlessly, we don't know. But I'm confident it's not going to play out like the doomsday scenario."

Brown said the expansion is so unprecedented, it could have the same geopolitical consequences ethanol is supposed to remedy.
"It could create urban food riots in many low- and middle-income countries in the world. That political instability, in turn, could disrupt economic progress," he said.
Jennings said the market would not allow such major disruptions and would ensure livestock remains the primary consumer of U.S. corn.
"I think it's outrageous to suggest that we're going to have a food fight over this issue. I think the people in the industry understand these complexities and understand that corn has multiple uses," he said.
Cattle prices have declined recently, in response to rising corn prices in excess of $3 per bushel. Livestock producers are concerned about the trend but unsure if it will mean there is less land to produce feed, said Jodie Hickman, executive director of the South Dakota Cattlemen's Association.
"It might be a little bit of a heavy lift for 2008 to get enough acres. It all depends on who you talk to. Those predictions are kind of all over the board."
Economist Robert Wisner of Iowa State University said Brown's predictions are high.
"I think market forces will slow the expansion of ethanol," he said. "I think that will probably shut the industry expansion off at a little lower level than what he's projecting there. But the general picture, definitely this ethanol expansion will have a substantial impact on food prices - we don't know yet exactly how high that impact might be."
Brown is proposing solutions such as increased fuel efficiency standards for vehicles and hybrids that could be plugged into an electric grid powered by a huge infusion of wind power.
But another of his solutions involves making fuel from grass and other plant fibers. Jennings and many others support the idea. It would produce the same fuel Brown decried Thursday.