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Copyright 2008 The Omaha World-Herald Company

 May 8, 2008 Thursday
Metro; Iowa; Midlands; Nebraska; Sunrise Editions

SECTION: BUSINESS; Pg. 01D

LENGTH: 606 words

BYLINE: Joseph Morton, WORLD-HERALD BUREAU

DATELINE: WASHINGTON

BODY: 

WASHINGTON -- Rising food prices have sparked a Capitol Hill showdown over whether to roll back federal mandates for the production of corn-based ethanol.

The so-called "food vs. fuel" issue is prompting hearings, press conferences and a war of letters.

Sen. Ben Nelson, D-Neb., said Wednesday that he has signed a pro-ethanol missive penned by Sens. Chuck Grassley, R-Iowa, and Tim Johnson, D-S.D.

That letter urges the Environmental Protection Agency to hold the line on the current Renewable Fuels Standard, which calls for fuel companies to blend 9 billion gallons of corn ethanol this year. That amount is set to increase to 15 billion gallons by 2015.

Nelson said it's just not right to blame biofuels for the current rise in food prices.

"We understand the concern that people have today about the rising cost of food, but it's just absurd to pinpoint ethanol as the cause when you have oil at $120 per barrel and you have drought conditions in various parts of the world that's also affecting food prices," Nelson said.

The letter by Grassley and Johnson comes in response to another letter signed by 26 senators, including presumptive GOP presidential nominee John McCain, asking the EPA to review the ethanol mandate. That letter argues that the EPA could waive or at least cut back the mandate to help rein in food prices.

Ethanol has been tied to rising food prices because ethanol plants are gobbling up increasing amounts of the country's corn crops. That higher demand has driven up the price of corn, which has a domino effect on several other agricultural products.

It encourages farmers to plant more corn and less of other crops, which then become more expensive. Livestock producers who rely on grain to feed their animals see their expenses rise and raise meat prices.

Midwestern senators, including Nelson and Grassley, defend ethanol, as does Sen. Tom Harkin, D-Iowa, a longtime champion of biofuels. A spokesman for Sen. Chuck Hagel said the Nebraska Republican has yet to sign either letter.

Rick Tolman, chief executive of the National Corn Growers Association, applauded the role of farm state lawmakers in countering emotional attacks on ethanol.

"There's a lot of knee-jerk reaction" that can be answered but not in the short, emotional way the attacks are made, Tolman said.

"I can't get it into a sound bite," he said.

U.S. farmers produce more than enough corn to meet food demands and feed the ethanol plants, he said.

High prices for corn today are partly the result of a speculative bubble, he said.

Ethanol's defenders point to the role that fuel costs play in food prices and other problems. Ethanol may be contributing somewhat to the food price increases, they say, but only a fraction.

The Grassley letter cites Ed Lazear, chairman of the president's Council of Economic Advisors, as saying the increased production of ethanol accounted for only 3 percent of the 43 percent global increase in food prices since last year and only 0.25 percent of the 4.5 percent increase in U.S. food prices.

Grassley this week questioned how corn prices could affect other food.

"I don't know of one rice paddy that can be used to grow corn," the Iowan said. "Ripping out your orchard to plant corn is just ludicrous."

Nelson said ethanol is simply the easiest target for people upset about food prices.

"I would wager that the high cost of transportation has had a greater impact on the high cost of food and increasing prices of food . . . than ethanol," Nelson said. "Ethanol's been blamed for everything except the storm in Myanmar, and it's early -- there may be some that will think that that had something to do with it as well."

LOAD-DATE: May 8, 2008