01/12/07 Food vs Fuel Dilemma

Food vs. Fuel Dilemma. I'm Greg Martin with today's Line On Agriculture. The Senate Ag Committee Wednesday struggled with the 'food versus fuel' dilemma that's driving corn prices higher and could drive some livestock producers out of business. Returning Senate Ag Chairman Tom Harkin urged that the next farm bill accelerate rural energy production for the whole nation in an effort to move the ag sector from one that supplied food and fiber alone - to a sector that supplies food, fiber and energy. HARKIN: Our new bill this year will not be quote, a new farm bill, in the classical old fashioned manner. It must be bold, innovative, challenging and supportive of a transition to a bio-economy. But while lauding a rural renaissance in the Midwest - former Chairman Saxby Chambliss warned soaring corn prices fueled by the Renewable Fuels Standard could cripple the livestock industry. CHAMBLISS: Mr. Chairman, the RFS is bidding corn and fuel grains away from traditional customers and beginning to affect the livestock and poultry industries. If corn prices continue to set new highs over the next year, the broiler industry in my home state of Georgia will come under increasing pressure and I fear continued price spikes will force some producers out of business. According to Chambliss - it may be time to change incentives to help commercialize feedstocks other than corn. But National Bio-Energy Center Chief Mike Pacheco and USDA Chief Economist Keith Collins see cellulosic ethanol evolving from - not replacing - corn ethanol. Pacheco says corn ethanol can ultimately produce about five to 10-percent of the liquid fuels needed. PACHECO: To move the biofuels industry to where we need it to be, we have to go beyond corn and grain as the primary resource. We need to move to cellulosic biomass, trees, grasses, non-edible materials. Some of which are residues of existing industries. Pacheco says the Energy Department hopes to make cellulosic ethanol as cheap as that from corn in the next five-years. But for now - Keith Collins had this...tape COLLINS: Ethanol plants, at least in the current environment, can bid quite high for corn. So the adjustment will come from those sectors of the demand sector that are most responsive to prices. That's today's Line On Agriculture. I'm Greg Martin on the Northwest Ag Information Network.