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Ethanol Demand Threatens Food Prices

by 5m Editor
13 February 2007, at 8:30am

US - Rising corn prices are already affecting everything from the cost of tortillas in Mexico City to the cost of producing eggs in the United States.

The total amount of corn crops being used for ethanol production in the United States is quickly increasing. Experts are blaming this on the extra demand for ethanol biofuel. This creates a tighter supply of corn for food production, resulting in higher corn prices. Consumers will inescapably pay more for corn products, such as corn syrup, tortillas, and poultry.

The recent rise in corn prices--almost 70 percent in the past six months--caused by the increased demand for ethanol biofuel has come much sooner than many agriculture economists had expected.

According to the United States Department of Agriculture, this year the country is going to use 18 to 20 percent of its total corn crop for the production of ethanol, and by next year that will jump to 25 percent. And that increase, says Marshall Martin, an agriculture economist at Purdue University, "is the main driver behind the price increase for corn."

The jump in corn prices is already affecting the cost of food. The most notable example: in Mexico, which gets much of its corn from the United States, the price of corn tortillas has doubled in the past year, according to press reports, setting off large protest marches in Mexico City. It's almost certain that most of the rise in corn prices is due to the U.S. ethanol policy, says David Victor, director of the Program on Energy and Sustainable Development at Stanford University.

Source: Technology Review

5m Editor