Food and fuel prices linked, experts say

April 30, 2008 at 8:43 AM
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WASHINGTON, April 30 (UPI) -- The increased use of corn for ethanol production has linked the economies of food and fuel, neither of which are dropping in price, policy experts said.

"The price of gain is now directly tied to the price of oil," President of Earth Policy Institute Lester Brown told The Washington Post.

In 2008, about one-quarter of the corn raised in the United States will be diverted from feeding livestock to producing ethanol, the Post reported. As a result, corn and other grain prices are escalating.

Tyson Foods told the Post it expects to pay $600 million more this year in feed costs, the report said. On the wholesale level, the price of eggs has jumped 40 percent in the past year, the U.S. Department of Agriculture reported.

The increased grain prices have been a boon for farmers but an unwanted headache for legislators who have pushed mandates for ethanol consumption.

Texas Gov. Rick Perry wants the mandates rolled back, the Post said. The governor has said a 1 cent increase on corn prices per bushel costs the Texas livestock industry $6 million more a year, the Post reported.

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