Top USDA economist projects 58 percent growth in ethanol production

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WASHINGTON | An anticipated 58 percent jump in corn-based ethanol production next year will not boost food prices enough to harm consumers, the Agriculture Department's chief economist said Friday.

The economist, Keith Collins, projected that 118 U.S. ethanol plants will produce 9.3 billion gallons of ethanol for the crop year ending August 2008, up from the 5.9 billion gallons expected for the current crop year.

"This is just amazing, that's a huge increase," Collins said at a briefing with reporters.

After hovering around $2 a bushel for a decade, corn prices have nearly doubled in the last year, pumped to near records by the ethanol plants that have sprouted up around the country amid new enthusiasm for alternatives to foreign oil.

U.S. food prices are up more than 7 percent this year, according to government data, in part because of higher costs for animal feed. But Collins said the increase is mainly due to other factors, including bad weather that harmed fruit and vegetable production and low levels of Australian wheat crops.

Still, food prices -- particularly poultry and beef -- will be "slightly higher" in coming years as a result of increased biofuels production, Collins said. The meat, chicken and dairy industries have all said they are worried about the impact the ethanol boom will have on the cost of animal feed.

In its latest estimate, the department said 27 percent of the 2007 corn crop, or 3.4 billion bushels, would be converted into ethanol. This year, the USDA expects 20 percent of the corn crop, or 2.2 billion bushels, going into ethanol.

About 90.5 million acres of corn are expected to be planted this year, up 15 percent from 2006 and the most since 95.5 million acres were planted in 1944. Of the 48 states that grow corn, only Massachusetts is expected to plant less this year.

Shares of Archer Daniels Midland Co, the country's largest ethanol producer, rose 26 cents to $35.75 in midday trading.

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