Shortage of corn due to green policy

They forced more use of corn for ethanol by government policy. But now a shortage of corn is foreseen. We have competing needs here - food versus fuel. Will there be enough corn for food? Or will the green policy of rebates and other encouragement for development of use of ethanol cause a food shortage.

The Columbus, Ohio Dispatch predicts food riots:

Lester Brown, founder of the Earth Policy Institute, warned that much more corn will be needed from the 2008 harvest to feed the ethanol plants that will be online by then.

He blamed the lag on the failure of industry trade groups to keep up with development of ethanol plants.

.... Brown said increasing corn use for ethanol also reduces exports to low-income grain importing countries, which could cause political instability and result in urban food riots in many low- and middle-income countries.

"If the current scenario continues to unfold as we’ve projected here, it could create chaos in world grain markets and we should think through whether we want to do that or not," he said.

Everyone has been screaming for replacing oil by alternative fuels. Now the blunt hand of government policy went too far. Maybe. But take another look. How about a market solution?

Dineen [head of Renewable Fuels Association] said Brown’s estimates fail to consider that as much as 10 million more acres of farmland could be put into production next year.

"It ignores the reality of the marketplace," he said. "We can’t drive grain prices to the point that we can’t produce ethanol economically. There are limitations to what we’re going to be able to do. There are limitations to how much ethanol you can produce from grain."

He said that’s why nearly all ethanol producers are looking at making ethanol from other feedstocks, including switchgrass, wood chips and corn stalks.

Let's let the market decide. If people are hungry they will be willing to pay for the corn - a higher price then for fuel. It works.