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Ethanol boom affects other industries, could raise food pricesWASHINGTON (AP)--The next two years will be tough for the pork, chicken and dairy industries as the corn they use for feed is increasingly diverted to ethanol production, U.S. Secretary of Agriculture Mike Johanns said April 9. "I think the next couple of years will have its challenges," Johanns said in an interview with The Associated Press. "They have been challenged already." The ethanol boom means consumers will be paying more for their meat and dairy products, say representatives of those industries, though plans to increase corn acres could ease some of that pain. A report on planting intentions, released by the U.S. Department of Agriculture's National Agricultural Statistics Service, predicted at the end of last month that farmers will plant 15 percent more corn acres in 2007, the largest number since 1944. "There very definitely has been a market adjustment," Johanns said. Johanns said the growth in corn-based ethanol is expected to continue, but not forever. "There is a point out there, unless yields would dramatically increase, or something along those lines, where I think you do start to max out on corn," he said. He estimated that point as "somewhere in the vicinity" of 15 billion gallons of ethanol a year. Currently, 114 ethanol biorefineries nationwide have the capacity to produce more than 5.6 billion gallons annually, according to the Renewable Fuels Association. Johanns said that figure does not take into account the potential for new varieties that could vastly boost farmers' yields. "What if Monsanto comes out with a variety this year or next that increases dry land yields by 40 percent?" he asked. "Then, wow, the world just changed." Monsanto Co. supplies most of the world's genetically engineered seeds. To ease the pressure to produce corn, the administration is promoting such biofuels as cellulosic ethanol, which can be made from wood chips, switchgrass and corn-plant parts such as stalks and leaves. But the process of making ethanol from those sources still is in its infancy. Meanwhile, the meat and dairy industries are skittish. "Even with the increased acreage, there is little doubt that corn will remain at historically high price levels," Bill Roenigk, senior vice president and chief economist of the National Chicken Council, said after the planting report was released. "The rapid increase in input costs has already shown up in wholesale prices for poultry and will undoubtedly be passed on to consumers, sooner rather than later," he said. The price of corn has driven the cost of feeding chickens up 40 percent, according to the council. Chicken is the most popular meat with consumers. Dairy producers also worry. "It's going to be a problem for a while," said Chris Galen, a spokesman for the National Milk Producers Federation. The pressure to produce corn has encouraged some farmers to consider planting corn on land enrolled in a government program that pays them to set their land aside for conservation. After the planting report was released, showing a big corn increase, Johanns decided not to ease penalties for farmers who decide to pull acres out of the Conservation Reserve Program early. Still, the department has decided not to add any more land to the program for 2007 in favor of boosting corn production. President Bush's budget planned for a two-year suspension of new CRP enrollments, but Johanns said March 30 that he is "open to the possibility" of new enrollments for 2008. "I will not hesitate in the future to make adjustments to USDA programs if needed to achieve a balance in the agricultural sector," he added. B 2 4/23/07 1 Star WK Date: 4/19/07
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