Economists Blast US Corn Ethanol Program

The U.S. program subsidizing the use of corn for the production of fuel ethanol came under sharp criticism at a Senate hearing Wednesday. Economists told the panel the program leads to higher food prices. VOA's Barry Wood has more.

Corn prices worldwide have increased by 50 percent over the past year. John Sununu, a Republican senator opposed to farm subsidies, says corn prices have risen in part because America is using increasing amounts of corn to produce fuel for automobiles.

"When you're diverting a third of the [corn] crop to ethanol it has a real impact on prices," said Senator Sununu. "To produce a gallon of ethanol takes 1700 gallons of water. Thirty million acres of land, going to produce the corn for ethanol."

Calling the US ethanol program a disaster, Sununu said it is replete with taxpayer subsidies as both farmers and ethanol producers receive tax breaks from the government. In addition, he said, imports of cheaper sugar-based ethanol are blocked by high tariffs.

David Beckmann, the president of a church-based anti-hunger agency, says US farm subsidies should be abolished. Such a move, he says, would help bring down food prices.

"To have a more dynamic, responsive [subsidy free] agriculture, that is going to bring down food prices in the medium term," said David Beckmann.

Both Beckmann and Sunnunu spoke at a hearing of the Senate Homeland Security and Governmental Affairs Committee. Other experts told the committee ending the ethanol program could reduce corn prices by about 15 percent.

Josette Sheeran, the head of the Rome-based United Nations World Food Program, says the high price of oil has boosted the demand for food-based alternative fuels. This, she says, has contributed to the overall rise in food prices.

"And so what we're finding is that often energy bidders can outbid food buyers and consumers, and the higher the price of oil is the higher the price the energy producers are willing to pay," said Josette Sheeran.

Sheeran said in Africa palm oil and cassava are increasingly being used as alternative fuels.

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