I have previously mentioned the plans to locate an ethanol plant in El Salvador, as part of a joint project with Brazil and the US. Although the plant planned for El Salvador will process sugar cane, US ethanol plans focus on the use of corn. This demand for corn for fuel is driving up the price of basic foodstuffs for the poor throughout the world, according to the International Monetary Fund.
A very thorough description of the ethanol/food costs tradeoff appears in Foreign Affairs, in an article titled How Biofuels Could Starve the Poor. I recommend the article to anyone who wants to explore the issue. Here is one passage from the article:
The World Bank has estimated that in 2001, 2.7 billion people in the world were living on the equivalent of less than $2 a day; to them, even marginal increases in the cost of staple grains could be devastating. filling the 25-gallon tank of an SUV with pure ethanol requires over 450 pounds of corn -- which contains enough calories to feed one person for a year. By putting pressure on global supplies of edible crops, the surge in ethanol production will translate into higher prices for both processed and staple foods around the world. Biofuels have tied oil and food prices together in ways that could profoundly upset the relationships between food producers, consumers, and nations in the years ahead, with potentially devastating implications for both global poverty and food security.
It is not clear what benefits an ethanol plant in El Salvador will bring to the country, a point well made in this blog post by Carlos. (in Spanish). But helping to facilitate a world ethanol economy may only threaten food security with few benefits for the environment or consumers outside of the richest countries.