Growing use of corn for conversion to fuel may push up world food prices

“This year looks like being the first time ever that as much or more corn is converted into ethanol than exported. If oil prices stay high, it will propel this trend much further,” USDA economist Keith Collins, said in an interview with the Financial Times.

US energy legislation requires ethanol production to increase to 7.5bn gallons by 2012, requiring about 68m tonnes of grain – more than the total grain harvest of Canada, Brazil or Indonesia. US output supplies just 3 per cent of US cars, a figure expected to rise significantly.

Prices of corn have risen by close to 20 per cent in recent weeks as world grain stocks have fallen to their lowest level since the early 1970s.

Finfacts