US Disputes IMF Charge That Biofuels Production Has Been Largest Factor in Rising Food Prices
AP Online All: May 14, 2008 01:04:31 PM EDT -- WASHINGTON -- The Bush administration on Wednesday disputed the International Monetary Fund's claim that their push to increase biofuel production has been the biggest factor in rising food prices.
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The IMF recently estimated that the shift of crops out of the food supply to produce biofuels accounts for almost half of the recent increases in the global food prices. That has led to calls from anti-poverty groups to rethink government policies to boost biofuel production at a time that the IMF estimates that global food prices rose by 43 percent in the 12 months ending in March.
But the Bush administration's chairman of the Council of Economic Advisers, Edward Lazear, told a hearing of the Senate Foreign Relations Commitee Wednesday that biofuel production has played a only a small part in food inflation.
The United States has mandated increased production of ethanol, mostly from from corn, to reduce oil consumption and dependence on foreign energy sources.
Lazear told the Senate panel that the administration estimates that U.S. ethanol production from corn accounts for about 20 percent of the rise in corn prices over the last 12 months, but only about 3 percent of increases in overall food prices.
"The bottom line is that ethanol production is a significant contributor to increases in corn prices, but neither U.S. nor worldwide biofuel production can account for much of the rise in food prices," he said.
Lazear said that increased demand from developing countries, especially China and India, rising energy costs and draughts in some crop producing countries were larger factors in rising prices.
The IMF and other groups studying the problem agree that those factors have also been important.
Josette Sheeran, the executive director of the United Nations World Food Program, has called the diverse factors in increased prices "a perfect storm."
"This is creating perhaps the first globalized humanitarian emergency," she told the Senate panel Wednesday.
Author: DESMOND BUTLER, Associated Press Writer
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