LANSING – About a third of the increase in food prices over the last several years can be attributed to ethanol, renewable energy experts said during a Monday meeting of the Renewable Fuels Commission at Michigan State University.

“We have had a recent substantial increase in food prices and there are many, many causes of those prices,” said Chris Peterson, MSU agribusiness professor. Ethanol, Peterson said, was responsible for somewhere between 15 and 33 percent of the increase in food prices worldwide, depending on the statistical assumptions used.

“But there is no definite answer as to the exact role,” ethanol plays in food prices he cautioned. Agriculture and energy could coexist, he said, since agricultural productivity has increased at about 2.3 percent while world population has increased at about 1.1 percent.

Recent polling in conjunction with the presidential race has found that food and fuel prices have moved into the second most important issue after the economy and ahead of security, said Department of Agriculture Director Don Koivisto.

Among the factors driving food prices upwards, Peterson mentioned a shift in the world’s diet preferences to include more protein, poor exchange rates of the U.S. dollar combining with the purchase of foreign oil, failed grain crops in Australia and Canada, government policies among countries such as Argentina, Thailand, Egypt and Ukraine and speculators who are betting on oil prices.

No matter which factor is most responsible, the increase in food prices hits the poor hardest.

The average American spends less than 10 percent of their disposable income on food and would spend about $100-$120 more a year at the current rates, Peterson said.

“Part of the problem is that the average American is being hit with this increase along with gas and the weakening economy at the same time. The seriousness of this depends very much on how poor you are and where you live in the world,” he said.

Mr. Peterson calculated that a cellulosic energy facility would require a 14-county area to supply the corn stover – the green, inedible parts that can be converted into biodeisel. That estimate was based off the assumption that half of the existing corn farmers would sell stover.

Cellulosic production is not immediately economically competitive, but could be possible, “I’m here to tell you it can be done,” Peterson said.

Looking at a cellulosic energy potential was one of the three goals Koivisto challenged the commission at the start of the meeting.

Jerry Morehart, Marathon Oil commercial development manager, said development of biodeisel facilities in Michigan would depend on state incentives and demand.

Illinois gave Marathon large tax breaks that allowed Morehart’s company to locate a large plant in Champaign. Morehart said it is simply a matter of where is the next least-costly place to locate a facility.

Supply of renewable fuel on the production level is not a pressing concern, since blenders like Mr. Morehart will be required to produce only E-10 ethanol blends by the end of 2009.

The demand is more of a problem since flexible fuel vehicles only use renewable fuels 2 percent of the time, he said.

Michigan has five operational ethanol plants, in Caro, Albion, Lake Odessa, Blissfield and Marysville, with another four under construction or gathering permits, according to the Michigan Corn Grower’s Association.

Liesl Clark, the department’s legislative liaison, said the Senate has recently moved five bills concerning alternative energy, including an alternative fuel license plate that would pay for a trust, an alternative fuels fund and a renewable fuels act.

The House has moved three alternative energy bills, she said, including expanding renaissance zones to cover cellulosic energy farms and expanding the number of energy renaissance zones from 10 to 15 to accommodate as many as five new cellulosic energy zones. (HB 5746 ).

Clark said the House intends to move additional bills along. The House has five bills that have passed committee earlier this month. (HB 6006 , HB 5955 , HB 5938 , HB 5809 , HB 5746).

The Senate could take up legislation as early as Thursday with 12 potential bills. (SB 1040 , SB 1041 , SB 1042 , SB 1043 , SB 1044 , SB 1045 , SB 1146 , SB 1164 , SB 1165 , SB 1206 , SB 1220 , SB 1246 ).

Five bills have already been moved onto the Senate floor: SB 1129 , SB 1128 , SB 1126 , SB 1130 and SB 1132 .

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