Food price hikes fuel anti-ethanol moves in U.S.

Carey Gillam, Reuters 28 Apr 08;

KANSAS CITY, Missouri (Reuters) - Missouri is considering rolling back a mandate supporting ethanol production amid growing outrage over rising prices for food and livestock feed.

Less than four months ago, ethanol supporters were celebrating implementation of a Missouri law requiring gasoline sold throughout the state contain 10 percent ethanol. The law, passed in 2006, took effect January 1.

But now, in the face of growing criticism of the nation's ethanol-friendly policies, Missouri may be among the first to back away from ethanol supports.

Critics say federal subsidies and programs such as Missouri's, which encourage corn-based ethanol production, have

reduced corn stocks available for food and livestock feed and contributed to skyrocketing prices that are hurting consumers.

"There certainly are some questions on the ethanol issue that I believe we didn't delve into deep enough," said Neal St. Onge, a Republican Missouri state representative who chairs the house transportation committee.

St. Onge said the committee is studying a measure that would roll back the mandate and is still determining whether to push any action before the end of Missouri's legislative session next month.

The moves in Missouri come as Texas Gov. Rick Perry is asking the U.S. Environmental Protection Agency for a 50 percent waiver of the mandate for grain-based ethanol production.

Pilgrim's Pride Corp and Tyson Foods issued statements over the weekend supporting Perry's request, saying "unprecedented increases for corn and soybean meal" would add billions of dollars of cost to the food industry this year.

On the other side of the debate are the nation's corn growers, who have embraced federal and state incentives for corn-based ethanol production, planting a record corn crop last year.

Missouri Corn Growers Association Chief Executive Gary Marshall said ethanol production was only a small factor in food price increases, and the corporate oil industry was to blame for the scare tying ethanol production to rising food prices.

"It is a nice use of smoke and mirrors. The major oil companies see ethanol as a threat to their profits," Marshall said. "They can put as much oil money as they want to into this and create a big fight ... we're fighting it tooth and nail."

Last week, Agriculture Secretary Ed Schafer said about 25 percent of the nation's corn went into ethanol and said that the forces driving rising prices in corn and other commodities had more to do with high energy costs, increased consumption around the world and weather-related production problems.

He said aside from some small reductions in subsidies in a new farm bill, the administration was not planning to alter its support for ethanol production.

White House Press Secretary Dana Perino on Monday said biofuels was one of many different factors contributing to food crises around the world.

"While it might have some impact, it's not a huge impact. And it is something that we are all going to have to take into consideration as we move to economies that can run on alternative or renewable fuels," Perino said.

(Reporting by Carey Gillam; Editing by David Gregorio)