I'm not so sure of that. Although no one makes ethanol from rice food is fungible. If corn is too expensive people buy wheat, if that drives up the price of wheat people buy rice. Burning corn is going to increase all food prices.
Ethanol is produced world-wide. The US accounts for one third of the world production. China produced about a third that we did in 2004. The Chinese quadrupled that number by 2007. I doubt if they increased quadrupled grain production but they sure are controlling grain exports:
"Early this year, to control demand, it [China] began curbing grain exports through quotas and taxes. It promised continuing supplies to Hong Kong. But now grain importers there have had to pledge that they will not re-export. Diplomats say that China's caution has even affected the flow of food to North Korea, an old ally heavily reliant on shipments from abroad. Aid workers say North Korea is facing its worst food-supply crisis since a famine in the late 1990s." -- Economist
Ethanol fuel is a world-wide phenomenon. The EU wants to increase ethanol use to 5.75% by 2010.
For sake of dicussion, let’s say that true.
It still leaves a lesson here that all but the bureaucrats and the farmers have forgotten. Based on current input cost conditions (fuel, machinery, etc) the food prices we see today are the food prices needed to eliminate the government from agriculture.
An exception for meat prices. Meat prices today are probaly 25%+ below where they need to be, and will be a year from now. That’s because beef and hog feeders are liquidating in response to the current grain prices. They won’t be back until they have a reasonable expectation of a profit.
I remain convinced that the average consumer who complained about ‘farmers being paid not to grow crops’ expected this kind of outcome.