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The fast-growing demand in the US for corn used as the raw material to produce ethanol as a substitute to fossil fuels means politicians are putting more pressure on the government to reduce ethanol production.

They hope this will return corn supplies to the food market, which has been hit hard by recent floods in key corn-growing states.

In early May, for example, Republican presidential candidate John McCain and 23 other senators wrote to the US government, urging it to waive a part or all of the so-called Renewable Fuels Standard to ease pressure on the food market.

Huge flooding across the corn-belt has seriously damaged output, with prices approaching new highs. The price of corn has risen $1.30/bu over the past weeks to around $6.85 (Bt229) in the middle of last month.

Moreover, the tight supply is underlined by the US Department of Agriculture's (USDA) forecast on supply/demand for the 2008/09 season in which inventories of 673 million bushels were the lowest since 1995/96.

As a result, supplies are at very low levels and corn prices could rise to $8.00/bu or higher, according to the USDA forecast.

The Grocery Manufacturers Association (GMA) has come out in opposition to the ethanol industry with a plan to launch an anti-biofuel campaign.

The GMA also plans to hire Washington lobbyist group Glover Park to push for a cut in the Ethanol Mandate. GMA spokesman Scott Openshaw said the growing ethanol sector has been a factor contributing to higher food prices.

This is a factor that Congress can control and make an impact on the food-to-fuel mandates, the GMA asserted.

Besides corn-based ethanol, sugar-based ethanol is prominent in Brazil, currently the world's largest producer with an annual output of around 50 million litres.

As for Thailand, sugar cane and tapioca are emerging as the key raw materials for biofuel, especially for the upcoming E85, a mix of 85 per cent ethanol and 15 per cent petrol, which the government hopes will ease the cost pressures on motorists while boosting the farm sector.

Currently, the country produces about 70 million tonnes of sugar cane and 28 million tonnes of tapioca annually. As a net exporter of both crops, there has been little, if any, pressure on domestic supplies as far as the food sector is concerned.

On the other hand, farmers appear to have gained a better price for their crops and look forward to expanding their acreage to tap the new demand for biofuel crops.

Currently, the Thai ethanol industry has licences to produce over 10 million litres per day, but actual output is still less than 2 million litres.

Thailand already has an edge in the production of both tapioca and sugar cane. Tapioca productivity, for instance, is among the highest in the world.