U.S. farmers defend policies on ethanol

WASHINGTON — Farmers and ethanol producers defended their good fortune Wednesday in the nation's capital, where more lawmakers are blaming a corn-for-fuel policy for soaring food prices.

Farmers and ethanol executives told reporters that the biofuel industry is not the culprit behind skyrocketing corn and wheat prices that have set off riots abroad and grocery sticker shock in America.

"While we do have some role in higher corn prices, we're closer to a Little Bo Peep than an ax murderer," said Rick Tolman, President of the National Corn Growers Association at the National Press Club.

But there is little agreement on just how much impact biofuels like ethanol have had on food prices.

The ethanol industry puts the cost increase at 4 percent, while the Department of Agriculture says the figure is closer to 20 percent. International aid groups, including the World Bank, say ethanol accounts for a much larger chunk of the price surge.

As Congress readies its remedy search, ethanol producers fear the instinct will be to slash government incentives that encourage farmers to grow corn for fuel, rather than food.

That fear has been confirmed to a degree this week, as two Republican lawmakers on Capitol Hill proposed curtailing ethanol subsidies.

The portion of total U.S. corn plantings used for ethanol is expected to increase to 22 percent this year, up from 17 percent last year, according to the Department of Agriculture.

Poor weather conditions and a falling dollar should share blame for rising prices, but the ethanol industry said the biggest driver has been increasing fuel costs.

"All the crises we're facing have one common denominator: the ever-tightening oil market," said Renewable Fuels Association President Bob Dinneen. "We cannot afford to jettison the promise of biofuels due to this manufactured hysteria over a fight between food versus fuel."

The association represents ethanol producers, including Archer Daniels Midland Co. and Pacific Ethanol Inc.

Dinneen cited analysis that rising oil prices have had twice the impact on food prices as rising corn. It costs more money for farmers to fill their tractors and ship their harvests to grocers, and that has pushed up prices for consumers. He added that biofuels like ethanol have helped lower demand for oil, keeping prices 30 percent where they would be otherwise.