Ethanol blamed for higher food prices

CHICAGO, June 15 (UPI) -- Increases in milk and food prices have been blamed on a new competitor: ethanol production that takes corn that U.S. farmers need for feed.

Corn prices surged 73 percent during the past year on higher ethanol demand, the Chicago Tribune reported Friday. Corn rose to a three-month high Thursday on the Chicago Board of Trade, closing at $4.095 per bushel.

In Florida, milk likely will rise to more than $5 a gallon, said Bill Brooks, a dairy economist with Downes-O'Neill, a dairy product brokerage firm.

"We have a new competitor," Brooks said during a conference of producers and processors in Chicago. Dairy farmers pay higher prices to feed cows because ethanol production depends on corn and other grains, the Tribune said.

"And the government is subsidizing this competitor," Brooks said, referring to the 51 cents-per-gallon government subsidy paid to ethanol producers to keep costs low and encourage ethanol's use as an alternative to gasoline.

"Saying rising feed prices don't have a direct impact on the cost of food is as ridiculous as saying that rising gasoline prices will not result in people paying more to fill up their cars," David Ray, American Meat Institute spokesman, said in the Tribune report.