A Call For 'Time Out' On New Ethanol Plants

Predicting that demand for corn to produce ethanol will drive world grain prices to unacceptable levels, an agricultural expert is calling for a moratorium on new U.S. ethanol distilleries while the U.S. reexamines energy and agricultural policies. The U.S. is the world's largest corn exporter, and Lester R. Brown, founder and president of Earth Policy Institute, estimates that as much as half of the U.S. corn crop will be used for ethanol by 2008—more than twice 2006 levels and an amount much higher than past estimates. A USDA official agreed that past estimates were too low and attributed the underestimates to volatility in ethanol demand, which has surged because of high gasoline prices and government support. With corn prices several times higher than a year ago, Brown warns that U.S. policies are laying the groundwork for a battle between food for people and fuel for U.S. vehicles. He predicts that prices for other grains—wheat, rice, and soybeans—will rise with corn on a worldwide basis because grain consumers usually substitute one grain for another when prices increase. Also, prices for other crops are likely to increase as farmers shift more cropland to corn to take advantage of its high price. Brown warns that the result will be soaring grain prices, leading to food confrontations in low-income countries that rely on grain imports, such as Algeria, Egypt, Indonesia, Mexico, and Nigeria.