Biofuels backlash in US as food costs hit home

Michael Mathes, Yahoo News 8 May 08;

A biofuels backlash has erupted in major ethanol producer the United States, as lawmakers and experts debate the merits of converting food to fuel to support America's age-old love affair with the automobile.

With gasoline at record prices at US pumps, and soaring corn, rice and wheat costs sparking a global food crisis this year with deadly riots in several nations, some have questioned the wisdom of President George W. Bush's call for higher US biofuel mandates that divert US crops, like corn, to fuel production.

"Why are we putting food in our gas tanks instead of our stomachs?" Richard Reinwald, owner of Reinwald's Bakery in Huntington, New York, asked members of Congress at a hearing last week on skyrocketing food costs.

Biofuels are derived from foodstuffs such as corn, soybeans and sugarcane, and plants like switch grass and their cellulosic waste.

Touted just months ago as an answer to spiking gas prices, biofuels are enduring closer scrutiny by US lawmakers alarmed by the high cost of food staples and how they are sapping millions of American households.

Members of Bush's own Republican party are turning on him, including Senator Kay Bailey Hutchison, who called on Congress to undo "America's ethanol mistake."

"In recent weeks, the correlation between government biofuel mandates and rapidly rising food prices has become undeniable," Hutchison said in a statement on her website.

"At a time when the US economy is facing recession, Congress needs to reform its food-to-fuel policies and look at alternatives to strengthen energy security."

Hutchison is due to introduce legislation to Congress that would freeze biofuel mandates at current levels.

Biofuels are refined to produce fuel similar to those made from petroleum, but their growing use has been cited along with poor harvests due to drought, surging demand in Asia as living standards have risen, higher transport costs and trade restrictions for the rapid rise in food prices.

Joachim von Braun, head of the US-based International Food Policy Research Institute, said a moratorium on biofuels from food grains in 2008 would lower corn prices by 20 percent and wheat prices by 10 percent in 2009 and 2010.

Renowned US economist Jeffrey Sachs has also leveled heavy biofuels criticism.

"What should be abandoned is the use of our current food supplies to turn them into ethanol, especially in the United States," Sachs told the Australian Broadcasting Corporation, calling the food-to-fuel program "a lousy bargain." In December Bush signed the Energy Independence and Security Act, which calls for a six-fold increase in the use of ethanol, to 36 billion gallons (136 billion liters) per year by 2022.

The United States is the world's top producer of corn-based ethanol, and the Bush administration sees it as a key way to reduce dependence on foreign oil and curb fossil fuel emissions, the main source of man-made global warming.

Lester Brown, founder of the Earth Policy Institute (EPI) said "the evidence irrefutably demonstrates that this policy is not delivering on either goal."

"In fact, it is causing environmental harm and contributing to a growing global food crisis," Brown wrote in a scathing editorial in the Washington Post.

EPI says the United States burned 25 percent of its corn supply as fuel last year, leading to just a one percent reduction in the country's oil consumption.

Some scientists warn that biofuels actually increase greenhouse gas emissions, as farmers convert forest and grassland to new cropland to replace or add to grain diverted to biofuels.

"Corn-based ethanol, instead of producing a 20 percent savings, nearly doubles greenhouse emissions over 30 years, and increases greenhouse gases for 167 years," Timothy Searchinger and other experts wrote in a study published in the journal Science.

Yet scores of American farmers eyeing swelling corn prices have abandoned wheat to grow corn, leading to the lowest US wheat ending stocks in 60 years, according to the US Department of Agriculture, and causing a ripple effect of rising commodity prices.

Reinwald the baker said that in 2006 he paid 17 dollars for a 100-pound (45-kg) bag of bread flour; today it costs 52 dollars -- more than three times as much.

World Bank urges US to consider effect of ethanol on poor
Business Times 9 May 08;

(MEXICO CITY) The United States should consider spiralling food prices that hurt the world's poor when it sets policies that are funnelling much of its corn crop into biofuel production, the World Bank said on Wednesday.

Global food prices for staples like wheat and rice have surged in recent years, causing hunger, riots and hoarding in poor countries. The trend is typically blamed on a combination of factors like higher food consumption in fast growing economies like China, and on bad weather that has hit crops.

But a global push to ramp up ethanol production is also seen pushing prices higher, and World Bank president Robert Zoellick said the United States should take this into account.

'The country has to assess the effect of that on the overall set of humanitarian issues in terms of the price of food products,' Mr Zoellick told a news conference in Mexico City.

The US government says corn-based ethanol, which can be used as a substitute for gasoline, can help reduce US dependence on oil from unstable countries.

The US Congress last year passed legislation that would require the country's gasoline supply to include 36 billion gallons of renewable fuels by 2022. At the moment, more than a quarter of the US corn crop is turned into biofuel.

President George W Bush said last week that he still supports the US ethanol push and that the US ethanol industry is responsible for only a small part of food inflation.

But Mr Zoellick urged more discussion on the subject. 'The biofuel issue is one worthy of analysis and debate,' he said.

The World Bank last week pledged along with United Nations agencies to set up a task force to tackle soaring global food prices.

The US mostly uses corn to make the gasoline additive. The country subsidises the industry by providing a 51 cent tax incentive for blending the fuel into gasoline and by levying a 54 cent tariff for ethanol produced in Brazil\. \-- Reuters, Bloomberg