EXPERTS

"In the absence of cost-effective, domestically available sources for producing ethanol, rather than using corn, it would make far more sense to import ethanol from Brazil and other countries that can produce it efficiently \x{0427} and also to remove the 54-cents-per-gallon tariff on Brazilian ethanol imports. Our politicians may be drunk with the prospect of corn-derived ethanol, but if we don't adopt policies based on science and sound economics, it is consumers around the world who will suffer the hangover."

"The increase in many food prices reflects federal efforts to encourage the production of ethanol as an alternative fuel, said Richard Yamarone, director of economic research at Argus Research. Higher demand for ethanol has boosted prices for corn, an ingredient in the fuel's production, as well as for other grains as farmers have shifted resources to produce more corn, he said. Corn is the main source of high-fructose corn syrup, a widely used ingredient in sweetened beverages and processed foods.
Yamarone said overall inflation is contained. But he forecast fuel prices to stay close to where they are now as food prices rise this year. 
\x{0421}You'll see people complaining less about their gasoline bills and more about their grocery bills,\x{0422} he said.\x{0424}

--From Washington Post, Slowing Economy Isn't Cooling Prices, February 22, 2007

\x{0423}\x{0415}the president is now willing to throw the commodity economy into virtual chaos over biofuels vs. petroleum. It is a very dangerous gamble with serious potential macro-economic consequences \x{0427} inflation, or worse, the stag-flation type of slow-growth, high-inflation economy we saw in the early to mid 1970s when policymakers were last obsessed with finding easy answers to these issues.\x{0424}

\x{0427}Dave Juday, commodity-market analyst, Wall Street Journal, February 22, 2007

\x{0423}If we assume 15 billion gallons of ethanol from corn and today\x{0422}s conversion rate of 2.7 gallons of ethanol per bushel, that would absorb roughly half of the current rate of corn production near 11 billion bushels.  The days of the United States meat industry in its current state now appear to be numbered.  Start working on your Portuguese boys, we\x{0422}re moving to Brazil\x{0415}.The gates are now. The lights are flashing.  Does anyone see the train coming?\x{0424}

--David Nelson, Credit Suisse, State of Union Address, Sector Review, January 24, 2007

'\x{0422}We've seen a little of the retail food price impact already,' said Robert Wisner, an agricultural economist at Iowa State University.  Wisner predicted consumer prices would slowly rise over the next few years as the ethanol industry more than doubles its capacity\x{0415}.Meat and dairy items could see some of the largest increases because producers are being forced to pay much more for feed made with corn, Wisner said.  \x{0421}Feed is a major part of the cost of producing meat,' he said. \x{0421}When you double the feed costs ... that has a major impact on profitability of livestock.'\x{0424}

--From Demand for Ethanol May Hike Food Prices,  AFX News Limited, February 28, 2007

\x{0423}The rising food costs fueled by ethanol demand are also affecting U.S. consumers. \x{0421}All things that use corn are going to have higher prices and higher cost, to some extent, that will be passed on to consumers,\x{0422} says Wally Tyner, professor of agriculture economics at Purdue University. The impact of this is being felt first in animal feed, particularly poultry and pork. Poultry feed is about two-thirds corn; as a result, the cost to produce poultry--both meat and eggs--has already risen about 15 percent due to corn prices, says Tyner. Also expect corn syrup--used in soft drinks--to get more expensive, he says.\x{0424}

From Ethanol Demand Threatens Food Prices, 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, Technology Review, Feb 13, 2007

\x{0423}The situation will only get worse, says David Pimentel, a professor in the department of entomology at Cornell University.\x{0424}We have over a hundred different ethanol plants under construction now, so the situation is going to get desperate,\x{0422} he says. Adding to the worries about corn-related food prices is President Bush's ambitious goal, announced in his last State of the Union address, that the United States will produce 35 billion gallons of ethanol by 2017.

Still, some suggest that the overheated ethanol market could soon cool down. \x{0421}Politicians will see that, first of all, it is not helping our oil independence," says Pimentel. "It is increasing the price of food for people in the U.S., it is costing an enormous sum of money for everyone, and it is contributing to environmental problems. But I can imagine it is going to take another year or more before politicians realize they have a major disaster on their hands.\x{0422}\x{0424}

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