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Published April 10, 2009, 07:31 AM

Ethanol raises cost of nutrition programs

The increased use of ethanol could cost the government up to $900 million for food stamps and child nutrition programs, a congressional report says.

By: By Mary Clare Jalonick, The Associated Press , The Jamestown Sun

WASHINGTON — The increased use of ethanol could cost the government up to $900 million for food stamps and child nutrition programs, a congressional report says.

Higher use of the corn-based fuel additive between April 2007 and April 2008 accounted for about 10 percent to 15 percent of the rise in food prices during that time, the nonpartisan Congressional Budget Office said. That translates into higher costs for food programs for the needy.

The CBO said other factors, such as skyrocketing energy costs, had an even greater impact than ethanol on food prices during that period. Ethanol’s impact on future food prices is uncertain, the report says, because an increased supply of the crop could eventually lower food prices.

Roughly one quarter of corn grown in the United States is now used to produce ethanol, and overall consumption of ethanol in the country hit a record high last year, exceeding 9 billion gallons, according to the CBO. Nearly 3 billion bushels of corn were used to produce ethanol in the United States last year — an increase of almost a billion bushels over 2007.

As the use of ethanol has greatly increased, several groups, including food retailers, meatpackers and restaurants, have banded together to oppose tax breaks and federal mandates for the fuel. They said it adds to their bottom lines, passing on costs to consumers.

Several of those groups said the report shows the unintended consequences of ethanol.

“As startling as these figures are, they do not even tell the story of the toll higher food prices have taken on working families, nor the impact higher feed prices have had on farmers in animal agriculture who have seen staggering losses and job cuts and liquidation of livestock herds,” the Grocery Manufacturers Association, American Meat Institute, National Turkey Federation and National Council of Chain Restaurants said in a statement.

Supporters of ethanol disagreed, saying the report was good news.

“The report released by the Congressional Budget Office confirms what we’ve known for some time: The impact of ethanol production on food prices is minimal and that energy was the main driver in the rise of food prices,” said Tom Buis, chief executive officer of Growth Energy, an ethanol industry group.

The report also estimates that the use of ethanol reduced gasoline consumption in the country by about 4 percent and reduced greenhouse gas emissions from the transportation sector by less than 1 percent.

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