Report: Ethanol raises cost of nutrition programs

Comments:  | Leave A Comment

WASHINGTON — Food stamps and child nutrition programs are expected to cost up to $900 million more this year because of increased ethanol use.

WASHINGTON — Food stamps and child nutrition programs are expected to cost up to $900 million more this year because of increased ethanol use.

Higher use of the corn-based fuel additive accounted for about 10 percent to 15 percent of the rise in food prices between April 2007 and April 2008, according to the nonpartisan Congressional Budget Office. That could mean the government will have to spend more on food programs for the needy during the current budget year, which ends Sept. 30. It estimated the additional cost at up to $900 million.

The CBO said other factors, such as skyrocketing energy costs, have had an even greater effect than ethanol on food prices. CBO economists estimate that increased costs for food programs overall due to higher food prices will be about $5.3 billion this budget year.

Ethanol’s impact on future food prices is uncertain, the report says, because an increased supply of corn has the potential to 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 nine billion gallons, according to the CBO. It took nearly three billion bushels of corn to produce ethanol in the United States last year — an increase of almost a billion bushels over 2007.

The demand for ethanol was one factor that increased corn prices, leading to higher animal feed and ingredient costs for farmers, ranchers and food manufacturers. Some of that cost is eventually passed on to consumers since corn is used in so many food products.

______

To read the rest of this article, subscribe to our digital or paper edition. For previous editions, contact us for details.

Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Tags:

Comments

blog comments powered by Disqus
Follow

Get every new post delivered to your Inbox.

Join 364 other followers