Senior Bush Administration officials their stance on corn-based ethanol fuel yesterday, saying it is only one factor in rising food prices, pointing to high energy costs as the main culprit.
Ethanol production is on target to use about 25 percent of the 13.1-billion-bushel U.S. corn crop that's projected for this year, according to USDA. That forecast is worrying world governments and food aid workers.
Consumer food prices normally rise by about 2.5 percent annually, points out USDA. The increase in 2007 was 4 percent-- the most in 17 years. Forecasts for 2008 are pointing to a another 3 percent to 4 percent increase.
As the Bush Administration sticks to it's decision to boost renewable fuel supplies, corn prices are setting record highs.Corn for delivery in May rose 15-1/4 cents to $6.07 a bushel at the Chicago Board of Trade Tuesday, reports Reuters news service.
Food prices have taken on even more importance as oil prices climb. U.S. crude futures rose sharply to a record high near $114 a barrel on Tuesday at the New York Mercantile Exchange, Rueters reports.
Asked whether he favors releasing some of the 34.7 million acres enrolled in the U.S. Conservation Reserve Program for farming, USDA Secretary Ed Schafer said 1 million acres were coming out of program this year and 4.5 million next year, but USDA is not sure if the land is going to be re-enrolled. "The reality is, if you planted all of that into corn, you might affect the price maybe 20 cents," he said.
Adding to the food challenge are crop failures in some countries. The rice crop in particular has been cut by droughts and those prices are burdensome, especially for some of the worlds poorest countries that depend on it as a major food source. That and the increased use of grains, along with a growing worldwide demand for food has lead to grain shortages, rising prices, bread lines, and food riots around the globe.