June 12 (Bloomberg) -- Agriculture Secretary Ed Schafer said increased use of corn-based ethanol isn't a major cause of higher food prices in the U.S. and he doesn't expect any significant changes in the country's renewable fuels policy.

``We don't think conditions today warrant changes,'' Schafer said today in a meeting with Bloomberg News reporters and editors in Washington.

Industry groups representing companies including Kellogg Co., Tyson Foods Inc. and Kroger Co. said June 10 they are coordinating efforts to reduce U.S. biofuels-use requirements with a new ``Food Before Fuel'' lobbying campaign.

Biofuels produced by Poet LLC, VeraSun Energy Corp. and Archer Daniels Midland Co. are being blamed for rising food inflation. The White House estimates that ethanol is contributing 2 to 3 percent of the gain, while the Washington- based International Food Policy Research Institute says it accounts for about 30 percent.

The Senate Energy and Natural Resources Committee is holding a hearing today on the relationship between the renewable fuel standard and rising food prices.

Record Corn Prices

Corn rose to a record for the sixth straight session on the Chicago Board of Trade, climbing as high as $7.2175 a bushel in overnight electronic trading. The commodity has surged 79 percent in the past year. Still, adjusted for inflation, corn is less than half the price it reached in 1974.

U.S. corn production may drop by 10 percent from last year and inventories may decline to a 13-year low before the harvest next year because of heavy rains in Corn Belt states, the USDA said June 10 in a report. High corn prices may constrain the development and expansion of ethanol plants, slowing biofuels growth, Schafer said.

``It's important to develop that infrastructure'' to support the industry's expansion, Schafer said. Without it, meeting government rules for ethanol consumption may become more difficult, he said.

President George W. Bush signed legislation last December that requires a more than fourfold increase in the use of biofuels including ethanol to 35 billion gallons by 2022, in an effort to reduce gasoline consumption.

No Change Expected

``I don't expect we will see a change in the renewable fuels standard,'' Schafer said in today's interview. The case for biofuels will be helped once members of Congress ``start looking at decreases of the number of barrels of oil in their state'' because of ethanol use, Schafer said.

Schafer and U.S. Energy Secretary Samuel Bodman sent a letter to Congress yesterday saying biofuels ``are already moderating prices,'' and gasoline would cost 20 cents to 35 cents a gallon more without ethanol.

Schafer last week attended a United Nations conference on biofuels and food inflation in Rome where countries including Egypt and Brazil criticized U.S. ethanol policies.

In many instances, he said, countries were merely finding ``another reason to beat up on the U.S.'' The conference report on biofuels, which called for more study of links to food inflation, was satisfactory, he said.

U.S. food prices may rise 5.5 percent this year, the most since 1989, the department said last month. Worldwide, prices for commodities such as wheat and rice were 43 percent higher in April than a year earlier, according to the Food and Agriculture Organization in Rome. The World Bank has said civil unrest may occur in 33 countries because of shortages and high costs.

To contact the reporter on this story: Alan Bjerga in Washington at abjerga@bloomberg.net.

Last Updated: June 12, 2008 10:19 EDT