The Washington Times - May 1, 2008, 09:48AM
White House Tony Fratto SEE RELATED:

MR. FRATTO: I don’t want to minimize it. I also don’t want to overplay it. And I’ve seen a lot of, you know, reporting that has tried to draw a direct link between, you know, ethanol and food prices.\ \ \ And if you really take a look at the breakdown of food prices in this country, and the contribution because of biofuels, it’s not as significant as some of the reporting that I’ve seen has made it appear, you know, for a lot of different reasons.\ \ \ One, there are a lot of other factors that are affecting our food prices. You know, we have competition for exports. We have the, you know, increasing cost of energy that makes things like fertilizer more expensive. It makes transporting and distribution of food more expensive.\ \ \ But the biggest thing if you ask, you know, why in certain countries do you see, you know, much higher increases in the price of food than you’re seeing in the United States?\ \ \ That’s because the vast majority of the food that we eat in the United States is processed or served in restaurants, and a lot of the cost comes from these other value-added efforts, whether it’s the packaging, the marketing, the distribution, serving it to you at your table. And that’s where most of the cost comes from.\ \ \ Also remember that, you know, the biggest impact on price with respect to, you know, grains in this country is, you know, pretty much limited to corn, where, you know, you’re seeing corn prices rise. And that’s only a portion of most food products.\ \ \ If you go to a developing country, you know, if you go to — or even if — you know, even if you go to Mumbai and walk — in India and walk into a market, you know, what you’ll see are stacks of flour and rice and, you know, milk in large containers. You know, these are people who are living on, you know, one or two or three dollars a day, and they’re buying commodities. So if the price of rice doubles in Thailand at the local market, and you’re used to spending 70 cents out of a dollar — you know, the dollar a day that you earn — on food, now all of a sudden you’re — you know, you need to cut back your food.\ \ \ And so it is a very acute problem in poor countries that, you know, the bulk of their food purchases are — you know, are commodities with not a whole lot of value added to them. It’s less acute a problem in this country. And I don’t say that to minimize it. A lot of families out there, you know, who buy the staples, you know, who are buying milk and eggs and bread and seeing these price increases, it’s significant for them, and it’s something that we — you know, we’re keeping a close eye on. It just has not had the same explosive effect in this country that you would find in poorer countries.\ \ \ Q Just to get to — biofuels are unfairly taking a lot of the blame for this.\ \ \ MR. FRATTO: Yeah, they’re just one of a handful of reasons for and not the biggest reason.
Members of Congress say they overreached by pushing ethanol on consumers and will move to roll back federal supports for it — the latest sure signal that Congress’ appetite for corn-based ethanol has collapsed as food and gas prices have shot up.\ \ \ House Majority Leader Steny H. Hoyer said Democrats will use the pending farm bill to reduce the subsidy, while Republicans are looking to go further, rolling back government rules passed just four months ago that require blending ethanol into gasoline.
Jon Ward, White House correspondent, The Washington Times