Underestimated US ethanol craze may hurt poor-EPI - Reuters

Underestimated US ethanol craze may hurt poor-EPI
04 Jan 2007 22:20:34 GMT
Source: Reuters

By Timothy Gardner

NEW YORK, Jan 4 (Reuters) - Poor people in countries that depend on grain imports
could soon be hit with rising food prices driven by explosive growth in the number
of U.S. distilleries producing the alternative motor fuel ethanol, an environmental
expert said on Thursday.

"Soaring food prices could lead to urban food riots in scores of lower-income
countries that rely on grain imports," Lester Brown, president of Washington, D.C.-
based Earth Policy Institute, a environmental research organization, told reporters
on a conference call. Consumers in Egypt, Nigeria, Mexico and Indonesia, where many
spend more than half their income on food, would be hardest hit, he said.

U.S. ethanol demand for corn will rise to 139 million tonnes by the 2008 harvest,
half of the U.S. corn crop and more than double the U.S. Department of Agriculture's
forecast of nearly a year ago, said Brown.

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Higher corn prices can also push wheat and rice prices higher as consumers buy those
grains instead. Brown called for a government-mandated moratorium on new ethanol
plants until the country can figure out how to meet rising fuel demand without boosting
grain prices, perhaps by requiring increases in the fuel efficiency of cars.

-snip-