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Ethanol Could Fuel Recession

Demand for grain triggers shortage

By Peter Fearon,  Newser Staff

Posted Apr 9, 2007 1:38 PM CDT

(Newser) – Demand for grain for biofuels like ethanol is spurring global food shortages and sending prices soaring—and could trigger a recession, warns the Wall Street Journal. Food prices are already skyrocketing in economies as diverse as India, China, Germany, the U.K., and South Africa. American consumers are likely to see higher prices for everything from milk to cereal to chicken soon.

 Economist Carl Weinberg compares the crisis to the seventies, when rising food prices combined with high oil costs to trigger a global slowdown. "In 1972, the last time grain stocks were this low, the story didn't end well in terms of inflation," he says.

Corn is unloaded at the Badger State Ethanol plant in Monroe, Wis., in this Sept. 23, 2005 file photo. High demand from the ethanol industry and strong export sales are expected to translate this year into the biggest U.S. corn planting since 1944, according to a report released...
Corn is unloaded at the Badger State Ethanol plant in Monroe, Wis., in this Sept. 23, 2005 file photo. High demand from the ethanol industry and strong export sales are expected to translate this year...   (Associated Press)
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