US Disputes IMF on Food Prices

WASHINGTON (AP) - The Bush administration on Wednesday was downplaying the role of biofuels production in rising food prices.

The debate involves questions of blame for rapidly inflating prices for staple crops that have led to famine and riots in many parts of the world.

Some economists and food scientists have argued that biofuel production should be scaled back because it is a major factor in rising food costs, particularly corn.

The IMF recently estimated that biofuels accounted for almost half the increase in consumption of major food crops in 2006-2007.

"Biofuel demand has propelled the prices not only for corn, but also for other grains, meat, poultry, and dairy" the IMF wrote in a report last month.

Anti-poverty groups and food scientists have called on governments to rethink policies to boost biofuel production at a time that the IMF estimates that global food prices rose by 43 percent in the 12 months ending in March.

But the Bush administration's chairman of the Council of Economic Advisers, Edward Lazear, told a hearing of the Senate Foreign Relations Commitee Wednesday that biofuel production has played only a small part in food inflation.

The United States has mandated increased production of ethanol, mostly from from corn, to reduce oil consumption and dependence on foreign energy sources.

Lazear told the Senate panel that the administration estimates that U.S. ethanol production from corn accounts for about 20 percent of the rise in corn prices over the last 12 months, but only about 3 percent of increases in overall food prices.

"The bottom line is that ethanol production is a significant contributor to increases in corn prices, but neither U.S. nor worldwide biofuel production can account for much of the rise in food prices," he said.

Lazear said that increased demand from developing countries, especially China and India, rising energy costs and draughts in some crop producing countries were larger factors in rising prices.

The IMF and other groups studing the problem agree that those factors have also been important.

Josette Sheeran, the executive director of the United Nations World Food Program, has called the diverse factors in increased prices "a perfect storm."

"This is creating perhaps the first globalized humanitarian emergency," she told the Senate panel Wednesday.