Iowa State University researchers are the latest to come forward warning about the dangers of existing and forecasted levels of corn-based ethanol production in the U.S.

The Center for Agricultural and Rural Development at ISU has published a new paper that finds that U.S. retail food prices already have increased $14 billion annually. They could climb $20 billion annually if crude oil prices reach $65 to $70 per barrel and U.S. corn prices reach $4.42 per bushel, compared to $2 per bushel in mid-August 2006, the study said.

At that crude oil price range, U.S. ethanol production could reach 30 billion gallons by 2012, consuming more than half of U.S. corn, wheat and coarse grains, and triggering higher meat and poultry prices for consumers, reduced meat and poultry production, and significant reductions in grain and meat exports.

"This study clearly shows that we are reaching a tipping point, and that over-reliance on corn-based ethanol to meet mandates would further drive up retail food prices, reduce domestic meat and poultry production, and erode our meat and grain export markets," said J. Patrick Boyle, president and chief executive officer of the American Meat Institute (AMI), one of the study sponsors.

The study indicates corn yield gains would be sufficient to moderate grain price increases if corn-based ethanol production peaks at 14 billion to 15 billion gallons annually by 2010 (10 percent of U.S. gasoline consumption), when existing ethanol plants and those already under construction come online. Under that scenario, corn prices peak at $3.43 per bushel in 2009 before leveling off at $3.16 per bushel by 2016.

As for cellulosic ethanol, the study finds that a subsidy of $270 per acre would be needed to encourage producers to convert to switchgrass on land capable of growing corn [ed.: which is something of a false distinction, given that the cellulosic industry is interested in switchgrass precisely because it can be grown on soil NOT otherwise allocated for food production.]

The study also notes acres currently idled in the Conservation Reserve Program (CRP) could play a useful role in "alleviat(ing) some of the financial stress on livestock producers" (during the early years of rapid ethanol growth), as well as mitigate short-term disruptions in grain supplies.

Study funders include AMI, Grocery Manufacturers/Food Products Association, National Cattlemen's Beef Association, National Chicken Council, NGFA, National Pork Producers Council and National Turkey Federation.

The study is available at ISU's website [1].