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Biofuels One Factor in Rising Food Prices

Soaring food prices are causing big problems in many parts of the world today. One factor in the ballooning costs may be the increasing global demand for biofuels - vehicle fuels made at least partly from corn (maize) or other food crops. From Washington, VOA's Kent Klein looks at the problem and some possible solutions.

Some critics of biofuels contend that using food-based fuel to power vehicles amounts to a competition for food between people and automobiles.

World Bank President Robert Zoellick said recently his agency has concluded that increased biofuel production is one factor in higher food prices. "While many are worrying about filling their gas tanks, many others around the world are struggling to fill their stomachs. And it's getting more and more difficult every day," he said.

The World Bank report says concerns about oil prices, energy security and climate change have led governments to encourage people to produce and use more biofuels and less petroleum. The report says that means greater demand for raw materials, including wheat, soy, palm oil and corn, which means costlier food. The World Bank also blames the food price increases on more expensive energy and fertilizer, as well as export bans and a weak dollar.

With that in mind, Kimberly Elliott, a senior fellow at the Center for Global Development, says it's time for governments to stop placing so much emphasis on corn-based biofuels such as ethanol. "So it's driving up food prices because we're shifting corn from food to fuel, and not doing very much for the environment, if anything, and it is very costly, so it's really a policy that just doesn't make sense," he said.

The central U.S. state of Iowa is among the nation's leaders in growing corn and making ethanol. In Iowa City, Michael Ott, the executive director of Biowa, a trade association for biofuel producers, says encouraging ethanol production is not really a choice between food and fuel. "The corn that is used to make ethanol is inedible to humans. Only about five percent of the corn crop is directly consumed. The rest is fed to animals - like cattle, pigs and chickens - and then turned into products. So there's a lot of things that are made from corn. And to say that it's really a competition is not very fair," he said.

Still, a bushel of corn that sold for two dollars and 12 cents in January, 2005 went for almost six dollars ($5.97 on the Chicago Board of Trade) at Friday's close.

One alternative might be to make ethanol from something other than corn. Brazil's agriculture minister believes the answer may be sugar.

Reinhold Stephanes says his government is boosting Brazil's output of ethanol made from sugar without hindering efforts to increase food production. Brazil is the world's largest sugar producer, and it is expected to use the majority of the cane it harvests this season to make ethanol.

In New York, the head sugar trader for the trading company Newedge USA, James Cassidy, says that approach is working for Brazil, but it's not likely to help the United States. "Most countries don't have enough acreage for sugar. The cost of sugar production is too high in those countries. That's the case in the U.S. We don't have anywhere near enough excess sugar, we're an importer of sugar. We don't have enough area to expand our acreage for sugar production, and we don't have a cost of production low enough to make it feasible," he said.

Kim Elliott of the Center for Global Development says the long-term solution is to put more effort into developing the next generation of biofuels. "Ethanol that comes from switchgrasses or other sources, or from biomass, that is, you use the corn stalks rather than the corn itself. Those are both more efficient, potentially, and don't have these land-use effects. You can still use the corn for food and not have the increasing demand for land," she said.

In Iowa, Michael Ott says that next generation of biofuels is on the way. "I firmly believe that corn-based ethanol is the initial solution. It's not the last thing that we're going to make. It works well. It is a supplement that's taking a small percentage of the market. But it's giving us the infrastructure, it's giving us the access to modify the process to make bigger and better things," he said.

Or perhaps the solution lies not in increasing energy production, but in reducing energy consumption. Eric Holt-Gimenez, the executive director of Food First, the California-based Institute for Food and Development Policy, says people need to use less fuel, no matter what kind. "The whole problem with this biofuels mania is that we're being invited to believe we can overconsume our way out of overconsumption. It's over. We can't continue to consume the way we consume, not energy, anymore. We're going to have to cut back," he said.