USDA Sees Happy End To Ethanol/Food Price Skirmish

By Lorraine Heller

10/8/2007 - The link between growing ethanol demand and higher food prices has been overstated, according to the US Agriculture Secretary, who forecasts that supply and price pressures will even out as markets "do their work".

Addressing the Consumer Federation of America at the end of last month, acting Agriculture Secretary Chuck Conner said that despite short term difficulties, farmers are responding to rising commodity demands by adding acreage and boosting yields.

"Higher corn prices are not the only or even, I would argue, perhaps the most important factor in higher prices of certain retail food items," he said.

"When we break down what is happening with food prices, we do see a complex set of factors at work. It's not quite a simple equation of rising ethanol demand equals higher food prices."

Conner was addressing rising concerns related to the impact of increased ethanol demand on ingredient and food prices, as more and more corn is being pumped into the biofuels industry.

According to USDA statistics, ethanol demand for corn will rise to 3.3bn bushels this year. Some 30 new ethanol plants have been opened since last year, and another 76 are thought to be under construction, which are expected to double current production capacity to 13bn gallons by 2009.

Food Navigator News.Com, Oct. 8, 2007