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Ethanol as cause of food crisis 'flat-out wrong'
May 10, 2008
By David R. Sands and Stephen Dinan - Agriculture Secretary Ed Schafer
yesterday said U.N. and other international aid officials are "flat-
out wrong" to call U.S. ethanol production from corn a major factor in
world food shortages and riots.
Mr. Schafer, a longtime proponent of biofuels, vehemently 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 up to 3 percent of food price increases.
"Only a very small ****tion of this problem is ethanol driven," Mr.
Schafer said in an interview with The Wa****ngton Times. Global food
prices have risen 45 percent since mid-2007.
Mr. Schafer also said the administration will have an "uphill climb"
to sustain President Bush's promised veto of the farm bill compromise
that Republicans and Democrats on Capitol Hill reached this week.
"Many Republican legislators in both houses ... have indicated they're
going to vote to override the president," he said, noting the lure of
"money in their district."
Mr. Schafer has become the administration's point man for opposing the
farm bill, arguing it does not sufficiently cut subsidies to high-
income farmers.
"They've made it look good; they've said, 'Oh, we put some limits on
folks here,' but the reality is they haven't," he said.
Mr. Schafer, a former governor of North Dakota who was sworn in as
agriculture secretary in January, in the middle of the farm bill
discussions, said farm income is projected to reach a record $92
billion this year, which is 50 percent higher than the average over
the past 10 years.
He said continuing subsidies and adding new ones make no sense when
farm incomes rise.
Congressional negotiators announced the outline of a compromise this
week but the bill hasn't been finalized.
Alise Kowalski, spokeswoman for Rep. Robert W. Goodlatte of Virginia,
the top Republican on the House Agriculture Committee, said people
should wait to see the measure before judging it.
"Without being able to read the text and without being able to see it,
you can jump to a lot of conclusions," she said.
Several lawmakers on Capitol Hill, including Mr. Goodlatte, have said
they are waiting to hear Mr. Bush say he will veto the bill, rather
than Mr. Schafer. But White House spokesman Scott Stanzell said the
president stands by Mr. Schafer's statement, and that Mr. Bush hasn't
spoken because he is in Texas for his daughter Jenna's wedding.
Capitol Hill negotiators did try to move toward the Bush
administration, cutting aid to higher-income farmers and landowners,
but at hundreds of thousands of dollars higher than Mr. Bush's target
of $200,000 in annual gross income.
The bill would increase spending for food stamps and other emergency
nutritional programs, boost funding for protecting farmland for
conservation, and establish new disaster assistance for farmers. It
would also slightly reduce the subsidy for corn-based ethanol for fuel
while doubling the subsidy for production of cellulosic ethanol.
Mr. Schafer said the president will have a better chance of having his
veto upheld by the House than by the Senate.
"That House, I think, is closer to the street, closer to the people in
the grocery stores having tough times and wondering why we would do
this," he said.
Mr. Schafer has led the defense of the U.S. biofuels program, which
has come under fire most notably from former top Bush administration
officials.
World Bank President Robert B. Zoellick and U.N. World Food Program
head Josette Sheeran, both of whom served as top officials at the
State Department and U.S. Trade Representative's Office, have said the
switch to ethanol, which is made from grains, is raising the demand
for staples such as wheat, rice and corn to record levels.
"I'm concerned about the fusing of food and fuel markets," which pits
moneyed energy interests against the world's poor, Ms. Sheeran told
the Peterson Institute for International Economics this week. "Energy
bidders can outbid food buyers and, in a year of tight supplies,
that's having a bigger impact than it would ordinarily."
And Jeffrey Sachs, a top adviser to U.N. Secretary-General Ban Ki-
moon, said this week that the U.S. biofuels program, the world's
largest, represents a "huge blow to the world food supply."
President Bush has ordered the Agriculture Department to release $200
million in emergency food aid to low-income countries struggling with
higher food costs. The administration has also asked for $350 million
in new food aid funding in the supplemental war-spending bill, and
lawmakers may tack on even more.
But Mr. Schafer said that rising energy prices, drought in key
producing regions, and rising demand from developing countries such as
China and India have played a far more significant role than ethanol,
adding that those strains on the world's food networks can't be solved
overnight.
"Under our current models, we're showing that we will see these levels
of [food] prices for the next three years," he said.
And the USDA had more bad news yesterday, releasing a re****t
predicting that 2008 U.S. corn production could fall as much as 7
percent over last year. The re****t said wet weather in the corn belt
delayed planting.
"What's it mean ultimately? High food prices, for sure," Don Roose,
president of the Iowa trading firm U.S. Commodities, told the
Associated Press, adding that the USDA projections were "actually kind
of a bullish re****t" and the likeliest change is for production to
fall even more.
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