U.S. to Propose 'Three-Pronged Strategy' to Combat Rising World Food Prices

By Kaitlynn Riely | July 7, 2008 | 8:24 PM EDT

Washington (CNSNews.com) - The United States will present a "long-term, three-pronged strategy" to combat rising global food prices at a conference to be held by the United Nations Food and Agriculture Organization (FAO) this week.

Agriculture Secretary Ed Schafer defended U.S. biofuels production, which some critics have said contributed substantially to the current spike in global food prices. Schafer said the Department of Agriculture's (USDA) analysis indicates that increased biofuels production accounts for only 2 to 3 percent of the overall worldwide price increases.

Instead, Schafer will propose that world leaders immediately expand humanitarian assistance to countries unable to meet minimum nutrition standards, take measures to increase the production and availability of staple foods in developing countries best able to rapidly increase food output, and expand research and the use of agriculture-related technology.

"The United States contributes more than one-half of all the world's food aid and the world's other developed nations have an obligation to provide food efficiently without obstructing access to it or limiting safe technologies to produce it," Schafer told reporters last week.

A report released May 28 by the FAO in anticipation of its meeting in Rome said an increase in food prices, even at moderate rates, can immediately make it difficult for poor households to afford the cost of food. The document lists 22 countries, including Haiti and Liberia, which are now vulnerable due to the combination of high levels of chronic hunger and their status as net importers of food and fuel.

More than 40 heads of state are expected to attend the U.N. High-Level Conference on World Food Security and the Challenges of Climate Change and Bioenergy, which will take place in Rome from June 3-5. Schafer will lead the U.S. delegation.

Some nations have called for the U.N. conference to focus on international guidelines restricting biofuels like ethanol, which are produced primarily from corn. Environmental groups say biofuels production reduces the amount of grain available for food consumption worldwide - jacking up prices.

But biofuels production only accounts for a small percent of the overall increase in global food prices, and the problem is a complex one, the agriculture secretary said.

A Complex Problem

Prices on both food and non-food commodities have dramatically increased in recent months, according to the 2008 USDA report. World market prices for major food commodities like grains and vegetable oils have risen to more than 60 percent above levels from two years ago, the report said.

The U.N. food price index rose, on average, 53 percent for the first three months of 2008 compared to the same three months in 2007. A report released May 28 by the FAO in anticipation of its meeting in Rome said that, although periods of high prices typically alternate with periods of low prices in agriculture markets, the current price levels for food commodities are unusually high, and may remain high for some time.

The U.S. government says several recent developments have caused prices to rise. Slower growth in production and quick growth in demand led to a downward trend in world stocks of grains and oilseeds beginning in 1999, according to the USDA's May report.

More recently, increased global demand for biofuel feedstocks, adverse weather conditions in 2006 and 2007 in some major grain- and oilseed-producing areas, rising energy prices, the devaluation of the U.S. dollar and protective policies adopted by some exporting and importing countries have all played a role in higher prices.

However, the World Bank, in a recent policy report on rising food prices, placed the bulk of the blame on increased bio-fuel production. Commodities like maize that were predominately used for food or feed are increasingly being used to produce bio-fuels, it said. The report noted that nearly all the increase in global maize production from 2004 to 2007 went for biofuels production in the U.S., while in the same period existing stocks were depleted by an increase in global consumption.

The World Bank document said adverse weather conditions, such as droughts in Australia and poor crops in the European Union and Ukraine in 2006 and 2007 did not, on their own, have a significant impact on prices. The report also said about 15 percent of the increase in food production prices were due to higher energy and fertilizer costs.

The agriculture secretary, however, disputes the idea that the increasing use of biofuels as a means to move away from dependence on crude oil is the main factor causing food prices to rise.

Schafer said biofuels actually mitigate environmental concerns and high oil prices.

"The International Energy Agency reports that biofuels production over the past three years has cut the consumption of crude oil by 1 million barrels a day," Schafer said. "Biofuels are helping address both environmental concerns and the economic impacts of high oil prices."

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