ANALYSIS-Smaller US corn crop renews food vs fuel debate

By Russell Blinch

WASHINGTON, March 31 (Reuters) - A sharp reduction in the U.S. corn harvest this year will squeeze consumers further at the grocery store and spark more criticism over using corn to make biofuel instead of food.

"It's our worst fears coming to pass," said Gregg Doud, an economist for the National Cattlemen's Beef Association.

Doud said consumers should brace for severe price hikes for eggs and more costly dairy products, poultry, pork and beef.

A drop in corn production combined with federal mandates backing ethanol production will result in "massive increases" in food prices, said Scott Faber, Vice President for the Grocery Manufacturers Association.

"Americans are already feeling the pressure of Congressional food-to-fuel mandates: in fact, food prices are rising twice as fast as inflation, placing significant pressure on American families who are already suffering from economic uncertainty," he said in a statement.

U.S. farmers are expected to slash corn plantings by 8 percent this year to 86 million acres, according to the U.S. Department of Agriculture's annual planting intentions survey released on Monday.

While U.S. soybean plantings rose as farmers devoted more acres to that lucrative market, the reduction in corn acreage raised fears of further pressure on world food prices.

Corn closed mostly higher on the Chicago Board of Trade after rallying to a record high at $5.88 per bushel amid concern worldwide 'agflation' could accelerate.