Bill 
The price farmers are receiving for grains and oil seeds are at the lowest levels since the 1930's.  (not including US and European subsidies)  One of the ways to increase the return on these commodities is to increase the demand for them by finding new uses for them.  There is a lot of interest in building plants to turn corn and wheat into ethanol to be used in a blend with gasoline (5 or 10%).  This is said to make the gas burn more cleanly with less CO2 etc. Also the waste grain from the ethanol process is used as cattle feed.  (this where a large amount of the corn and wheat produced goes anyway)
The questions are the same ones you asked.  However if the world population will not pay the farmers a living wage to produce food them who can blame the farmers for trying to grow fuel.
I have been burning ethanol blended gasoline in my van this year and I have noticed no good or bad effects.
George
'85 Westfalia