- The Washington Times - Friday, May 30, 2008

The Bush administration insists a growing demand from the burgeoning middle classes in developing nations, and not its focus on biofuels, is the key reason behind rising food prices.

Citing China and India as examples, President Bush recently noted, “Their middle class is larger than our entire population. And when you start getting wealth, you start demanding better nutrition and better food, and so demand is high and that causes the price to go up.”

In an interview with The Washington Times earlier this month, Agriculture Secretary Ed Schafer said U.N. and other international aid officials are “flat-out wrong” to cite U.S. ethanol production from corn as a major factor in world food shortages and riots.

Mr. Schafer, a longtime proponent of biofuels, sharply disputed efforts by the leaders of the World Bank and the U.N. World Food Program to blame ethanol for rising world food prices. He said his department calculates that competition between food and biofuels accounts only for at most 3 percent of food price increases.

“Only a very small portion of this problem is ethanol driven,” Mr. Schafer insisted in the May 9 interview.

While admitting that higher demand for corn for ethanol and soybeans for biodiesel has led to higher prices for those crops over the past couple of years, Mr. Schafer said there is not a “one-on-one relationship” between higher commodity prices and what consumers pay at the retail level.

“There are many factors at work,” he said.

Joe Glauber, the Agriculture Department’s chief economist, cited the “weather situation” as a factor driving up global food prices.

“In particular, droughts that have affected Oceania; Australia is suffering now or is just beginning to come out of a drought that really affected the last two crops quite adversely. We also had problems in the Canadian crop last year, problems in the Ukraine, problems in the European Union. All contributed to a very low wheat crop,” he contended.

The United States and other nations around the world are developing biofuels to cut their reliance on oil as a transportation fuel, to reduce greenhouse gas emissions, and to create new opportunities in agriculture, Mr. Schafer said. “The policy choices we’ve made on biofuels will deliver long-term benefits.”

World Food Program head Josette Sheeran has cited what she calls a “perfect storm” of factors that has led to soaring prices in recent months for such staples as wheat, rice, soybeans and corn.

The factors include severe drought in key agricultural exporters; rising global demand, especially in China, India and other growing Asian markets; record prices for oil and fertilizers; protectionism; and competition for farmland from biofuels.

c David R. Sands contributed to this report.

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