WASHINGTON - Ethanol will devour 50 percent more corn this year, eating into the food industry's share of the crop, the Agriculture Department said Thursday.
From breakfast cereal to beef to beer, competition from ethanol could raise prices for all kinds of foods.
People don't eat the kind of corn that makes ethanol, but cows, pigs and chickens do. And people eat other grains that will become less plentiful as farmers plant more corn. Demand for ethanol is pushing feed prices higher and enticing farmers to switch from other crops.
Farmers are expected to grow a record 12.2 billion bushels of corn in 2007, said Keith Collins, the department's chief economist. An estimated 3.2 billion bushels will go into ethanol, up from 2.15 billion in 2006.
"Even with that increase, we think production will fall short of demand," Collins said during the department's annual Agriculture Outlook Forum.
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Agriculture Secretary Mike Johanns downplayed any impact on food costs, saying the department anticipates increases of 2 percent to 3 percent every year.
"It can be a dozen different factors from farm to table that can impact that price," Johanns told reporters.
The chairman of the House Agriculture Committee said higher food prices aren't all bad.
"Frankly, we have been underpricing our food in this country," said Rep. Collin Peterson, D-Minn. "What this fuel thing is going to do is cause us to re-price our food to some extent. So consumers are going to pay more, and in my opinion, they should be, because we've been subsidizing them."
- Associated Press
