Reduced corn crop forecast plants fears:

The U.S. Agriculture Department sent shudders through much of the food industry Monday when it released estimates that showed farmers would plant 8% less corn this year.

With corn prices already pushing up food prices, a spokesman for the Grocery Manufacturers Assn. called the projection “alarming” and warned that the estimate bodes ill for consumers at the supermarket.

“Food prices are rising twice as fast as inflation, placing significant pressure on American families who are already suffering from economic uncertainty,” spokesman Scott Faber said. “It’s time for Congress and the administration to offer families some relief and stop food inflation.”

In particular, the association is protesting federal energy policies that have created increased competition between the nation’s food producers and energy companies for corn.

But don’t put all the blame on corn-based ethanol, the USDA said. Competing demands for farmland from high-priced wheat and soy crops also play into reduced corn plantings, officials said.

The decline in the amount of farmland that will be devoted to growing corn this year will worsen the effect of “food-to-fuel mandates which are resulting in massive increases in food prices,” Faber said.

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Federal officials said corn plantings have fallen as prices have soared for wheat and soy. Farmers are looking for the best payoff for their investments.

“There is a set amount of farm acres, and every crop competes for them,” said Elaine Kub, grains analyst for DTN, an Omaha-based agriculture information firm.

The acreage also has dipped because of the high cost of the petroleum-based fertilizers and agricultural chemicals that are used to grow corn as well as the standard practice of rotating crops to sustain farmland.

“Despite the decrease, corn acreage is expected to remain at historically high levels as the corn price outlook remains strong due in part to the continued expansion in ethanol production,” the USDA said in its report.

So, higher oil prices make corn-based ethanol more cost competitive, but those same higher oil prices increase the cost of planting and harvesting that corn, which puts downwards pressure on the number of acres in production. At the same time, higher corn prices make it a more attractive crop compared to some other grains, but they’re also rising in price, mitigating that shift in desirability.

Welcome to the dynamic, maddening world of economics.

On a slightly more serious note, can we all finally agree that:

• Corn-based ethanol as an end in and of itself is a very bad idea. It turns food into fuel, it has a minimal net energy gain, and there’s no way anyone can imagine the US growing enough of it to replace even a tiny portion of our liquid motor fuel consumption.
• The only way you can possibly justify it is as a bridge technology that helps us build the infrastructure now so that we can relatively quickly exploit cellulosic ethanol when it becomes available on a commercial basis. While I have no delusions (and neither should you) about cellulosic’s promise to replace all of our gasoline consumption, it does have a much brighter future than corn ethanol.
• We need to stop US politicians from pandering to some states (Iowa, raise your hand) especially during election years, with endless promises of subsidies, R&D money, etc. for corn ethanol.
• Similarly, we should admit right now that the mandate for US ethanol production (35 million gallons by 2017, compared to about 7 million produced in 2007) is a seriously, deeply, insanely flawed policy and abandon it immediately.
• Because we won’t suddenly find a mother lode of politicians with the spinal integrity needed to say no to Iowa and other farm states, our only way to loosen corn ethanol’s grip is to encourage those technologies that will out-compete it, like cellulosic ethanol and batteries for plug-in hybrid and all-electric cars, and better overall transportation policies.

My guess: We’ll be riding this hyper-speed price roller coaster for corn and other food crops for a long time.

See also: U.S. Biofuels Subsidies: Not for Farmers, but for Europeans

In recognition of April 1st, see: Coal Power: Warming America, Warming the Planet