The Congressional Budget Office says the increased use of ethanol could cost the government up to $900 million for food stamps and child nutrition programs. The CBO said that increased ethanol production accounted for about 10 to 15 percent of the rise in food prices between April 2007 and April 2008, and that translates into higher costs for food programs for the needy.
But the CBO said other factors, such as skyrocketing energy costs, had an even greater impact than ethanol on food prices during that time period. CBO economists estimate that increased costs for food programs overall due to higher food prices will be about $5.3 billion in the current budget year.
Ethanol’s impact on future food prices is uncertain, the CBO says, because an increased supply of corn has the potential to eventually lower food prices. Nearly 3 billion bushels of corn were used to produce ethanol in the United States last year.