Bad policy, not biofuel, drive food prices: Merkel

Reuters 17 Apr 08;

BERLIN (Reuters) - Bad agricultural policies and changing eating habits in developing nations are primarily to blame for rising food prices, not biofuel production as some critics claim, German Chancellor Angela Merkel said on Thursday.

Environmentalists and humanitarian groups have stepped up campaigning against biofuels, arguing they divert production away from food and animal feed while contributing to sharp rises in the price of cereals and milk products.

But Merkel, whose country is Europe's largest biofuel producer, said the rise in food prices was not mainly due to biofuels but to "inadequate agricultural policies in developing countries" as well as "insufficient forecasts of changes in nutritional habits" in emerging markets.

"If you travel to India these days, then a main part of the debate is about the 'second meal'," Merkel said.

"People are eating twice a day, and if a third of one billion people in India do that, it adds up to 300 million people. That's a large part of the European Union," she said.

"And if they suddenly consume twice as much food as before and if 100 million Chinese start drinking milk too, then of course our milk quotas become skewed, and much else too," she said referring to EU limits on dairy production.

Biofuels, which are seen by supporters as a way to increase energy security and reduce greenhouse gas emissions, are made mainly from food crops such as grains, oilseeds and sugar.

Critics argue there are few, if any, environmental benefits for so-called first generation biofuels. They have also been blamed for increasing grain demand and pushing up prices at a time of growing threat of famine in some parts of the world.

The FAO and the Organisation for Economic Co-operation and Development (OECD) have said biofuels were "one of the main drivers" for forecasts of food price increases of 20 percent to 50 percent by 2016.

(Reporting by Gernot Heller, editing by Kerstin Gehmlich and Mary Gabriel)