That's only part of it. Corn that fed folks and critters is now being diverted to ethanol. Corn fed critters has driven up the the price of milk and meat. There only so much acreage that can be farmed economically. Other acreage devoted to other crops is now being diverted to corn derived ethanol. Those other crops are now more expensive.
Calming ethanol-crazed corn prices
The front-month contract for a bushel of corn (56 pounds) on the Chicago Board of Trade has jumped from $1.86 at the end of 2005 to over $4 today, said Flynn.(January 30 2007)
I've debunked this so many times I get tired of doing it. "If" there is an effect over and above the hugely increased cost of oil, it is only temporary. Over the time frame of the last 25-30 years, we withdrew a huge amount of acreage from corn production, due to low prices (which, in turn, were driven by drastically increasing yield per acre). Given said increased yield per acre, bringing that land BACK into corn production should take care of the problem. The ONLY foods that will be affected long-term are those that use "whole-corn". Prices for animal feed will go DOWN as a result of ethanol production.
‘Sucse me sir...
Did you know that the corn used to make ethanol has other things that come out of it too...it’s not all used up and can’t be used for anything else. What’s left becomes feed for them critters you talk about, among other things.
And overall, the commodity value of the ingredients in most foods has barely kept up with the pace of inflation. The reason food prices are up can not be blamed on ethanol from corn.
When corn prices jump like that — and it is due to speculation, rather than actual demand — the price of beef falls, because farmers watch futures, and if they’re not going to make money on the beef, the beef gets butchered.
I think we all remember the Oprah fiasco that led to a drop in beef demand at a time when feed prices were high (about ten years ago). If this year is like last year, we’ll be awash in cheap beef for a while, then beef prices will be high until three or four years go by and there’s a normal supply at butchering weight.
Last June corn was over $4, and by July it was $3.25 a bushel. CNN Money sez that the D of Ag tallied corn exports of 1.715 million metric tons for the week ended January 17, mostly to Asia, and between probably having to buy it back when needed, and meanwhile paying $3 a gallon for fuel to plow, plant, spray, and harvest, what will happen is farmers will be plowing and planting right out to the middle of the road in 2008. :’)