Ethanol industry fuels debate

US - The booming North American ethanol industry has brought good times to grain growers and created jobs in the Prairie heartland, but it's also being blamed for driving up food prices, squeezing livestock producers' profits and even limiting efforts to feed the world's hungry.
calendar icon 23 October 2007
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A report published this week by CIBC World Markets said that while corn-based ethanol production has done little to satisfy America's thirst for energy, it's helped fuel the biggest rise in US food prices in more than 15 years.

"By the end of next year, we predict that food inflation will be running well over five per cent and as (US) ethanol production rises to nine billion gallons in 2009, food inflation will approach seven per cent, its highest level in more than 25 years."

Canadians can expect their food prices to be squeezed as well since the United States "is a major, major corn exporter to the rest of the world," CIBC economist Jeff Rubin told The Canadian Press.

Chad Hart, an economist at Iowa State University, said meat prices have been particularly affected. He expects meat and egg prices to rise five to nine per cent due to increased corn prices driven up by the huge demands of the American ethanol industry.

Some time in January -- a precise date has not been set yet -- the Manitoba government will jump onto the global ethanol bandwagon, requiring that 85 per cent of all gasoline sold in the province contain a 10 per cent ethanol blend.

Source: WinnipegFreePress
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