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July 19, 2007

Could the ethanol boom backfire?

Ethanol is seen in the United States as a way to reduce our dependence on foreign oil. But it's already caused some food prices to rise. And here in North Carolina, farmers could also see adverse side effects, says Dr. Mike Walden, an N.C. State University economists.

"Ethanol in the U.S. is made from corn," says Dr. Walden, of the College of Agriculture and Life Sciences. "That's important to realize. North Carolina is actually a net importer of corn. Yes, we do grow some corn, but we don't grow nearly enough corn for what we use.

"Now how do we use it? We are not talking about corn going into direct consumer consumption. But corn in North Carolina is used as a feed for our very large and dominant livestock industry, particularly the hog industry and chicken operations," he adds.

"So if we have significantly higher corn prices as a result of the ethanol move, then we could see this adversely affecting our livestock industry in our state because they are going to have to pay more for the corn they are using for feed. And in fact, studies show that if these higher corn prices are sustained we could actually see livestock production in North Carolina going down," Walden explains.

"The big beneficiaries from corn-based ethanol production will always be the big corn states in the Midwest."

Posted by deeshore at July 19, 2007 07:59 AM

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