Food prices rose last year more because of higher energy prices, not the production of corn-based ethanol, a study showed.
The study was published by the Congressional Budget Office on Wednesday.
Ethanol was responsible for about 10 to 15 percent of the increase in food prices from April 2007-April 2008. But oil and electricity had even greater impact of 22 to 36 percent of the increase during the same period.
The impact on food prices resulting from hikes in the price of corn related to ethanol production was smaller than the effect of higher prices for energy, which contribute to the CPI-U for food directly through higher costs for transportation and electricity and indirectly through higher costs for producing commodities, the study said.
Food prices spiked by 5.5 percent during 2008, the highest annual gain since 1990, according to the Agriculture Department, which also forecasts an increase of 3.5 percent in 2009. However, the CBO said beyond the period that ended in April 2008, food prices are likely to be higher than they would have been if the U.S. did not use ethanol as a motor fuel. The study also says ethanol's impact on future food price inflation is uncertain because an increased supply of corn could lower food prices.
In addition, the CBO's study says the use of ethanol has cut gasoline consumption by about 4 percent last year and slashed by less than 1 percent the greenhouse gases which are blamed for contributing to global warming. However it also says clearing of cropland and forests to produce more ethanol could more than offset those reductions.
The target=_blank> Impact of Ethanol Use on Food Prices and Greenhouse-Gas Emissions
target=_blank> Impact of Ethanol Use on Food Prices and Greenhouse-Gas Emissionsstudy discusses the relationship between ethanol, greenhouse-gas emissions, food prices and federal spending on nutrition programs.