A leading environmental thinker says the world is heading for a crisis in corn supply, with repercussions throughout the world's economy - all because of faulty data collection about ethanol production.

Investments in ethanol distilleries have soared in recent years, but data collection in the fast-changing sector has fallen behind, said Lester R. Brown of the Earth Policy Institute (EPI). And because of inadequate data on the number of new plants under construction, the quantity of grain that will be needed for fuel ethanol distilleries has been understated, he said. Vastly.

The U.S. Department of Agriculture (USDA) projects distilleries will require only 60 million tons of corn from the 2008 harvest. But Brown and the EPI estimate that distilleries will need 139 million tons - more than twice as much.

If the EPI estimate is at all close to the mark, the emerging competition between cars and people for grain will likely drive world grain prices to levels never seen before.

EPI points out the USDA projection was released in February 2006, before the effect of surging oil prices on investment in fuel ethanol distilleries was fully apparent. It also relies heavily on the Renewable Fuels Association (RFA), a trade group, for data on ethanol distilleries under construction, but the RFA data have lagged behind movement in the industry, the group says.

In its forecast, EPI consolidated data from four groups that publish data on ethanol plants: RFA, the one most frequently cited, Europe-based F.O. Licht, the publisher of World Ethanol and Biofuels Report; BBI International, which publishes Ethanol Producer Magazine, and the American Coalition for Ethanol (ACE), publisher of Ethanol Today. It has composed a master list, which can be viewed here.

EPI's consolidated list of existing and forthcoming ethanol producers is much larger than the RFA list, calling for much more corn than had previously been expected.

According to EPI, the 116 plants in production on December 31, 2006, were using 53 million tons of grain per year, while the 79 plants under construction - mostly larger facilities - will be expected to use 51 million tons of grain when they come online. Expansions of 11 existing plants are to use another 8 million tons of grain (1 ton of corn = 39.4 bushels = 110 gallons of ethanol).

In addition, easily 200 ethanol plants were in the planning stage at the end of 2006. If these translate into construction starts between January 1 and June 30, 2007, at the same rate that plants did during the final six months of 2006, then an additional 3 billion gallons of capacity requiring 27 million more tons of grain will likely come online by September 1, 2008, the start of the 2008 harvest year.

This raises the corn needed for distilleries to 139 million tons, half the 2008 harvest projected by USDA. This would yield nearly 15 billion gallons of ethanol, satisfying 6 percent of U.S. auto fuel needs.

This unprecedented diversion of the world’s leading grain crop to the production of fuel will affect food prices everywhere, said EPI. As world corn prices rise, so will those of wheat and rice, both because of consumer substitution among grains and because the crops compete for land, the group forecasts. Both corn and wheat futures were already trading at 10-year highs in late 2006.

The U.S. corn crop, accounting for 40 percent of the global harvest and supplying 70 percent of the world’s corn exports, looms large in the world food economy. Annual U.S. corn exports of some 55 million tons account for nearly one fourth of world grain exports. Substantially reducing this export flow, said the EPI, would send shock waves throughout the world economy.

According to Robert Wisner, Iowa State University economist, Iowa’s demand for corn from processing plants that were on line, expanding, under construction, or being planned as of late 2006 totaled 2.7 billion bushels. Yet even in a good year the state harvests only 2.2 billion bushels. As distilleries compete with feeders for grain, Iowa could become a corn importer.

The competition for grain between the world’s 800 million motorists who want to maintain their mobility and its 2 billion poorest people trying to survive is emerging as an epic issue.

The EPI suggested soaring food prices could lead to urban food riots in scores of lower-income countries that rely on grain imports, such as Indonesia, Egypt, Algeria, Nigeria, and Mexico. The resulting political instability could in turn disrupt global economic progress, directly affecting all countries, it said.

Alternatives to creating a crop-based automotive fuel economy include raising auto fuel efficiency standards by 20 percent, the equivalent of the 2 percent of U.S. automotive fuel supplies now coming from ethanol, the group said. It also wants to see a higher emphasis on gas-electric pluggable hybrids like that detailed this weekend by GM.

EPI is calling for a moratorium on the licensing of new distilleries, and a much greater effort on producing ethanol from cellulosic sources such as switchgrass and other feedstocks not used for food.