- The Washington Times - Friday, May 2, 2008

President Bush yesterday asked Congress to authorize $770 million to ease the global food crisis, most of which will be focused on Africa, while the administration denied that corn-for-ethanol subsidies are a major cause of the worldwide surge in food prices.

“We’re sending a clear message to the world that America will lead the fight against hunger for years to come,” Mr. Bush said in a statement to reporters in the White House.

But agricultural experts testified on Capitol Hill yesterday that high food prices are here to stay, as robust demand for food worldwide collides with record fuel costs to put unprecedented pressure on food prices.

Although the prices for basic foods like corn, wheat and oil have been soaring, the prices paid to farmers are only a small part of what consumers pay at the store. As much as 75 percent of the retail price of food can be attributed to processing, packaging, transportation and distribution. These costs have also risen substantially, mainly because of high fuel prices.

“With the average food item traveling more than 1,500 miles before reaching the final consumer, it is no wonder that food costs are increasing,” Tom Buis, president of the National Farmers Union, told the Joint Economic Committee. “When looking back over the last seven years, gasoline prices have increased 198 percent and diesel fuel prices have increased almost 250 percent.”

The cost of food globally has spiked 43 percent in the past year, Edward Lazear, chairman of the White House Council of Economic Advisers, said on a conference call with reporters.

Government energy-policy supports for ethanol, which raises the demand for corn and thus its price, also have come under fire to the point that The Washington Times reported yesterday that Congress is considering cutting them.

But Mr. Lazear and White House spokesman Tony Fratto both criticized the notion that ethanol production is a main cause of rising food prices, and both the White House and the congressional witnesses offered a barrage of other, longer-term factors.

“The bottom line is that we think ethanol accounts for somewhere between 2 and 3 percent of increasing global food prices,” Mr. Lazear said.

An American Farm Bureau Federation analysis found that 44 percent of rising food costs are due to rising prices for natural gas and fuels used to make fertilizer and to run farm machinery as well as to process foods and to transport them to market. The bureau said the farmer’s share of retail food prices has been at about 25 percent since the 1970s.

“After many commodities leave the farm gate, high costs for energy, fuel and transportation are added and passed onto the consumer,” bureau president Bob Stallman told Congress. “Increased retail prices can especially be seen on highly processed foods.”

In his announcement of increased food aid, the president also called on countries both rich and poor to lower restrictions on agricultural trade, including some developing nations that are banning food exports and thus discouraging production of food, leading to shortages and higher prices.

“Some countries are preventing needed food from getting to market in the first place, and we call upon them to end those restrictions to help ease suffering for those who aren’t getting food,” Mr. Bush said.

He also called for other nations to reduce barriers to genetically modified foods.

“These crops are safe, they’re resistant to drought and disease, and they hold the promise of producing more food for more people,” Mr. Bush said.

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