Ethanol under fire

Ethanol under fire - TwinCities.com

Floodwaters aren't just damaging corn. They're washing away support for corn-based ethanol.

As corn prices keep setting records — another came Thursday — the beleaguered ethanol industry faces more critics shouting, "Enough!" Investors raced for the exits, too, as analysts Thursday warned of losses and urged dumping shares in ethanol makers.

"In the last 10 days, the world has changed in the corn market with massive flooding causing irreparable damage to this year's corn crop," said Citicorp analyst David Driscoll.

Corporate giants in the food, meat and dairy industries — including Minnesota companies General Mills, Hormel Foods and Land O'Lakes — this week launched a national campaign called Food Before Fuel. Its goal: to reverse government policies that have encouraged ethanol production regardless of consequences to the food system.

That group issued its latest blast Thursday, with an economic study blaming corn-based ethanol for igniting rampaging food-price inflation. Its study predicts that food costs will rise 9 percent this year, even faster than the misery levels of the 1970s.