Soaring corn prices spark official order to make biofuel from other sources Concerns about food security and soaring corn prices have prompted mainland authorities to order local governments to rein in grain-based ethanol processing projects. The National Development and Reform Commission released a circular on Monday demanding that local governments focus efforts to produce ethanol biofuel from non-grain sources, such as potato and sweet sorghum. The circular said all future ethanol production projects, regardless of the raw materials used, must seek central government approval until the State Council issued guidelines for ethanol biofuel and ethanol fuel production under the 11th Five-Year Programme (2006-2010). Ethanol production projects that are launched or expanded without prior approval will not receive financial support and will face investigation, according to the commission. The mainland's four state-designated ethanol fuel enterprises, which went into operation during the 10th Five-Year Plan (2001-2005), mainly process stale grain. The commission said they were banned from expanding production without central government approval. Beijing has been trying to encourage production of biofuels such as ethanol and methane from renewable resources as an economical and environmentally friendly substitute for oil. As one of the 10 key projects under the 10th Five-Year Plan, ethanol replaced unleaded petrol as the main fuel for vehicles in five provinces and 27 cities, including Heilongjiang , Jilin and Liaoning . It also accounted for one-fifth of the total fuel consumed nationwide, according to Xinhua. But the commission is concerned that the surging demand for ethanol biofuel - which on the mainland is mainly made from corn - had resulted in unbalanced grain stocks and had sent corn prices soaring. According to the China National Grain and Oils Information Centre, corn prices in Dalian , the mainland's top grain exporting port, increased a further 30 yuan per tonne this week to 1,530 yuan, up 200 yuan from late October. The commission said industrial processing consumed 23 million tonnes of corn last year, an annual increase of 16.5 per cent from 2001, while corn production increased at the slower annual rate of 5.1 per cent during the period. 'The excessive growth of corn processing has resulted in scarce feed for livestock and affected the development of animal husbandry. Some main corn producing areas are even considering importing corn,' the commission said in an earlier circular demanding that local governments stop approving corn-based ethanol processing. The circular said governments at all levels should conduct serious assessments of ongoing and planned corn-based ethanol processing projects, including their production capacity, land use and environmental impact.