The exceptional rate of growth of the ethanol industry and its effect on feed supplies for the meat industry has alarmed think tanks and livestock producers.

Ron Plain, an agricultural economist at the University of Missouri, says that increases in corn costs have already added 25 percent to the cost of raising hogs to slaughter weight, from a projected $40 per hundredweight in early 2006 to an actual cost of about $50 per hundredweight. If corn continues to the $4.05 per bushel price level considered the break-even in ethanol production, the increased feed costs will add 31 percent to the cost of hog production.

Gene Gourley, an Iowa pork producer and swine nutritionist, testified on behalf of the National Pork Producers Council to the Senate Agriculture Committee Wednesday that ethanol producers are receiving huge subsidies of $1.53 per bushel of corn purchased and tax credits of $0.51 per gallon of ethanol produced, resulting in runaway growth in ethanol production. "These incentives have the ethanol industry growing at an almost unbelievable pace," he said in his testimony. "New plants are springing up everywhere, and they’re using a lot of corn."

Lester R. Brown, president of Washington think tank Earth Policy Institute, compiled figures concerning ethanol plant construction and planned construction, and says that USDA projections of the amount of corn needed to feed the ethanol industry are far short of actual demand.

Brown says that ethanol construction data available is lagging behind the real world, where plants are going into production on a weekly basis, with the rate accelerating. He counts 116 plants in production at year-end 2006, consuming 53 million tons of corn annually. He counts 79 more in various stages of construction, while the RFA counts only 62, and 200 more on the drawing board.

According to Janet Larsen, EPI’s director of research, corn growers may or may not make up the difference by planting more and more productive corn, but the inevitable result is higher food prices. "Increasing the subsidies for ethanol production, as the Democrats are suggesting, is completely uncalled for.  Higher food prices could cause a consumer backlash against ethanol."

EPI suggests instead that fuel efficiency standards be increased to lower dependence on ethanol and that tax credits for ethanol production be reduced or eliminated.