The United States fuel ethanol industry is based largely on corn. People eat corn, as do almost every single farm animals that provide us with a food supply. Corn is an incredibly important food crop. Other grains are also used for making fuel ethanol.
Earth Policy Institute has released an interesting story on using food grains to make ethanol. According to the Institute, 107 million tons of grain went to U.S. ethanol distilleries in 2009 — enough to feed 330 million people for one year at average world consumption levels. More than a quarter of the total U.S. grain crop was turned into ethanol to fuel cars last year. With 200 ethanol distilleries in the country set up to transform food into fuel, the amount of grain processed has tripled since 2004. The story is at: http://www.earth-policy.org/index.php?/press_room/C68/2010_datarelease6/
Food or fuel? Sounds like we need more ethanol plants based on algae, hemp, cellulose and other non-food crops to me.