Study unveils ethanol contributed 10 %-15 % to higher US food prices

Increased use of ethanol in the US accounted for 10 %-15 % of the rise in food prices between April 2007 and April 2008, according to a study by the Congressional Budget Office.
However, over the same period, certain other factors such as higher energy costs "had a greater effect on food prices than did the use of ethanol as a motor fuel," said the report.

"The demand for corn ethanol, along with other factors, exerted upward pressure on corn prices, which rose by more than 50 % between April 2007 and April 2008," the study said. "Rising demand for corn also increased the demand for cropland and the price of animal feed."
These factors, in turn, raised the price of many farm commodities and, consequently, the retail price of food, CBO said. Food prices rose by almost 2.5 % in 2006, by 4 % in 2007, and by more than 5 % in 2008.

Beyond the one-year period that ended in April 2008, food prices are likely to be higher than they would have been if the US did not use ethanol as a motor fuel, the report said.
However, ethanol's effect on future food prices is uncertain because while federal mandates requiring additional ethanol use will continue to put upward pressure on prices, increases in the supply of corn and improved technology for making ethanol would tend to lower food prices, CBO said.

Research conducted by the Argonne National Laboratory suggests that in the short run, "the production, distribution and consumption of ethanol will create about 20 % fewer greenhouse gas emissions than the equivalent processes for gasoline," the report said.
However, if production of ethanol led to converting large amounts of forests and grasslands new cropland, "Those changes in land use could more than offset any reduction in greenhouse gas emissions because forests and grasslands naturally absorb more carbon from the atmosphere than cropland."