Corn Prices Rise, Pitting Chickens Against Ethanol

"We need to assess the corn-based ethanol mandate and its unintended effects on food prices for American consumers," Hutchison said in a separate statement. She said she will introduce legislation this week to cap ethanol production at the 2008 level of 9 billion gallons.

In a May 7 letter to the EPA, two ethanol supporters, Sens. Charles E. Grassley (R-Iowa) and Tim Johnson (D-S.D.), said ethanol accounts for a fraction of the increase in global and domestic food prices.

At a May 6 House subcommittee hearing on the renewable-fuel standard, Robert J. Meyers, the EPA's principal deputy assistant administrator for the office of air and radiation, said the agency would seek public comment on the waiver request.

Corn growers say there's plenty of their product to go around because farmers last year planted their biggest crop since the 1940s. They say price increases in dairy and other products are the result of stratospheric oil prices, droughts in other parts of the world, commodity-market speculation, and the growing global demand for grains.

"I don't believe they will be successful in swift-boating ethanol," said Bob Dinneen, president of the renewable-fuels trade group, referring to the negative 2004 ad campaign about Democratic presidential nominee John F. Kerry's military service in Vietnam. "Without ethanol, gas would be 15 percent higher than it is today."

That's a hard sale to make to Tyson Foods in Springdale, Ark.

"We never supported the mandates, and I regret not being more vocal against them," Richard L. Bond, Tyson's president and chief executive, said in an interview. The company feeds 40 million chickens a week, and its ration costs have gone up $1 billion over the past two years, he said. Chicken prices at the store haven't soared yet because supplies are still plentiful.

In the meantime, Tyson is involved in two ventures to use some of the 2.3 billion pounds of animal fat it produces each year -- to make renewable diesel fuel.

Cindy Skrzycki is a regulatory columnist with Bloomberg News. She can be reached atcskrzycki@bloomberg.net.