Ethanol giants team up to fight "grocers' smears"

American corn-based ethanol companies – furious at being blamed for lingering high food prices – have formed a new lobby group to fight their cause.

Even though corn and fuel costs have dropped dramatically over the last few months in the US, the cost decreases have not yet brought cheaper food to consumers.

And so determined are the companies to defend themselves from the grocery firms' accusations that four large corn-based ethanol players have formed a group called Growth Energy.

The first order of business has been to begin a war of words with the Grocery Manufacturers Association, which Growth Energy accuses of launching a massive smear campaign against ethanol, while reaping huge profits at the check-out.

"Now that the price of corn has dropped more than 50 per cent since the summer, we ask the big food industry to explain to the American people why food prices are still so high," said Jeff Broin, chief executive officer of POET, one of the founding members of Growth Energy.

"The answer to high prices is simple economics. People will pay whatever food producers are charging - and we will not allow them to smear ethanol in the process," he added, speaking at the the launch of the group this week.

The other three companies in the group are ICM, Green Plains Renewable Energy and Hawkeye Energy. They are all members of other ethanol-based advocacy groups such as the Renewable Fuels Association and American Coalition for Ethanol but Broin insisted there was room for a new advocacy group to better promote the case for biofuels.

"We believe the more associations the better," he said. "We want to be a fresh, aggressive voice in the energy debate. We're a moral-purpose organisation that wants to feed and fuel the world."

Growth Energy’s biggest challenge may be to ward off attempts to cut US government subsidies when president-elect Barack Obama takes office.

During his campaign Obama supported those subsidies – which helped him win votes in the so-called "farm belt" – but many Democrats are against subsidies which they claim contributed to recent food price rises.

Some environmental groups are also still resistant to first generation biofuels such as corn-based ethanol, which they claim are driving up food prices and contributing to water shortages and soil erosion.