By Bill Tomson

  Of DOWJONES NEWSWIRES


  WASHINGTON (Dow Jones)--The U.S. corn-based ethanol industry is expanding
faster than many expected and livestock producers will need to adjust to
costlier corn that it depends on for feed, U.S. Department of Agriculture Chief
Economist Keith Collins said Wednesday in a Senate Agriculture Committee
hearing.

  Senators widely lauded the current boom in ethanol production, but that glee
was tempered by concern over adverse effects on the livestock industry by
lawmakers such as Sen. Saxby Chambliss, R-Ga.

  "We have to be very careful about this - that we don't create a crisis
situation in the poultry and livestock industry at the same time we're trying
to promote (ethanol) ..." Chambliss said. "We're going to have to continue to
keep a very close eye on this."

  Poultry, swine and cattle producers will have to be "resilient" in how they
adjust to the changing demand on corn for likely three or four years until
experimental cellulosic crops such as switchgrass can take some pressure off
the demand for corn as an ethanol feedstock, Collins told senators.

  Collins predicted than ethanol production will reach 12 to 13 billion gallons
a year by 2009, up from about 5 billion in 2006. Indeed, he said, production
could reach as much as 13 to 15 billion gallons as soon as 2012 without
seriously jeopardizing meat- and poultry-producing industries.

  Chambliss reacted to that prediction with cautious optimism. "That's the
first I've heard of that," he said after the Wednesday hearing. "I'm glad to
hear (Collins) say it. I hope he's right."

  But earlier in an opening statement read aloud, Chambliss warned of
irreversible damages that rising feed prices might do to the livestock sector.

  Ethanol, he said, is bidding away from "traditional customers and beginning
to affect the livestock and poultry industries. If corn prices continue to set
new highs over the next year, the broiler industry in my home state of Georgia
will come under increasing pressure and I fear continued price fights will
force some producers out of business."

  He said he hopes a result will not be the further consolidation of the
livestock industry.

  U.S. pork producers expressed sharp concern in testimony provided for the
Wednesday hearing and criticized government subsidies that are partially
fueling the growth in ethanol production and the demand for corn.

  Gene Gourley, a pork producer speaking on behalf of the National Pork
Producers Council, said: "These incentives have the ethanol industry growing at
an almost unbelievable pace. New plants are springing up everywhere, and
they're using a lot of corn."

  Higher corn prices might indeed make hog production more costly, Collins
said, because the livestock are heavily dependent on the commodity for feed.
And that may eventually mean higher pork prices for consumers.

  "The farm level value of hogs was about 29% of retail value of pork in
November 2006, so if the higher feed costs were fully passed on to retail over
time, a $1 per bushel increase in the price of corn would translate into about
a 3% increase in the consumer price of pork," Collins.

  The U.S. is going to have to plant a lot more corn this year to meet both
rising ethanol demands as well as feed usage and exports. USDA's Collins
predicted that farmers will need to plant 85.6 million acres to meet all of
those demands, much more than the 78.6 million acres planted in 2006.

  Ethanol production in the U.S. last year used 2.15 billion bushels of corn,
but the industry is likely to need another 1 billion more than that in 2007,
Collins predicted Wednesday. Ethanol consumption of a billion more bushels this
year "would require an additional 6.5 million acres of corn."