This paper says, flat out, that corn-based ethanol is currently costing the American consumer $47 per person, $14 Billion per year, just in higher food costs. Add in the $.51 per gallon blender subsidy on the USDA 2007/2008 projected production of 9.3 billion gallons (another $4.74 billion) and we're looking at $19 billion before the price of the product itself!
"The results indicate that expanded U.S. ethanol production will cause long-run crop prices to increase. In response to higher feed costs, livestock farmgate prices will increase enough to cover the feed cost increases. Retail meat, egg, and dairy prices will also increase." From the abstract.
Price Effects to Date The model calculates the market-clearing price in each year based on expected supply and demand conditions in that year. The model does not contain equations that describe the kind of speculative storage that drives the intertemporal basis on futures markets. What appears to have happened this year is that futures traders have anticipated higher long-run corn prices and have begun to build these high prices into nearby futures contracts. They can do this because corn can be stored from year to year. This means that most of the long-run price changes we anticipate have already shown up in market prices.
If we take the price increase that we have seen since July 2006 of approximately $1.50 per bushel in corn and associated price increases in soybeans and wheat, the per capita increase in food costs is approximately $47. Multiplying this cost by 300 million American consumers gives us a total cost of ethanol of about $14 billion. In addition, taxpayers have contributed $0.51 per gallon of ethanol. Because world feed prices track U.S. feed prices, the rest of the world’s consumers would also see higher food prices.
From Iowa State University
(58 page PDF)
Only if you're really into this stuff, Appendix B (889 page PDF)
