HENRY C. JACKSON Associated Press Writer DES MOINES, Iowa (AP)
The nation's fascination with ethanol is pushing food prices upward and raising the specter of potential shortages, according to a report released by a Washington-based policy group. The country's ethanol push is a "misguided effort to reduce its oil insecurity," according to the Earth Policy Institute report. The report released Thursday 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, speaking in a conference call with reporters, 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. Until today, carry over stocks of grain equaled 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, North Dakota 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 Mat thew Hartwig, a spokesman for the Washingtonbased Renewa b l e Fu e l s Association. Hartwig acknowledged that ethanol might bear some responsibility for increased food prices, but said the impact was fractional 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. "Certainly ethanol has had an impact in strengthening the price of commodities, but the impact on food price is minimal at best," he said. Hartwig also said the emergence of ethanol could offer benefits to farmers in less-developed countries. "Higher commodity prices can provide some opportunities for farmers in smaller countries," he said. "They could invest in more of the technology they need to be more productive."