Signs are growing that the government may allow farmers to plant crops on millions of acres of conservation land, while a chorus of voices is also pleading with Washington to cut requirements for ethanol production. The Midwest floods have washed out an estimated four million acres of prime farmland, crimping this year's harvest as the world desperately needs more grain. With corn prices setting records and soybean prices not far behind, the Bush administration is under intense pressure to do what it can to bolster the food supply. Senator Charles E. Grassley, Republican of Iowa and one of Capitol Hill's main voices on farm policy, on Friday urged the Agriculture Department to release tens of thousands of farmers from contracts under which they had promised to set aside huge tracts as natural habitat. “This is an extraordinary request,” Grassley said in a telephone interview as he toured his devastated state. “I would not make it if the situation in the Midwest were not so dire.” In disasters, the Environmental Protection Agency can roll back requirements for ethanol production, which could free up a large amount of corn for animal feed. Grassley, a strong ethanol backer, rejected that proposition, but in recent days many industries that depend on corn have urged the government to act. A quarter of the United States corn crop is used for biofuels rather than animal or human food, and the percentage is rising. What this has done to the price of gasoline is debated by ethanol's critics and defenders, but it has certainly benefited farmers, who have not seen such demand for their corn crop in decades.On the losing side of the equation have been cattle, hog and chicken producers, as well as consumers. The government's latest projection, released Friday, is that food prices this year will rise as much as 5.5 percent. Some products, including cereals and eggs, are expected to rise about 10 percent. An Agriculture Department spokesman said Friday that the Grassley proposal would be considered. This week, the agriculture secretary, Ed Schafer, said his department would consider “everything possible” to aid farmers. In the last couple of days, corn fell from its recent highs as traders grew convinced the government would release conservation land. Corn closed Friday at $7.21 a bushel, still an extraordinary price by historical standards. Keith Collins, the former Agriculture Department chief economist, will release a study on Monday saying that as much as half of the sharp increase in corn prices over the last few years is due to the demands of ethanol production. That view diverges sharply from the view of Collins' former boss, Schafer, who said at a Rome conference that only a tiny percentage of the increase in world food prices was due to American ethanol production.
