According to a Reuters article in The Washington Post,
global food prices are likely to remain high for the next two to
three years while the world replenishes food stocks, senior White
House officials said on Tuesday.
"Our estimate is that those prices will continue to stay high, not
escalate at the same rate as they did last year," Edward Lazear,
chairman of President George W. Bush's Council of Economic
Advisors, said in an interview.
"Inventories have been depleted and it will take a while to rebuild
those inventories, so those prices will stay high," likely for two
to three years, he said.
Disappointing harvests, surging demand in developing countries like
China and other factors have sent global commodity and food prices
skyrocketing over last year.
Biofuel production is widely seen as another driver in higher food
prices, which jumped 43 percent in the year through March. The
White House experts underscored that they did not think alternative
fuels like ethanol truly play a big role in higher food
costs.
"Those who are arguing that the president's increase in the
(renewable fuels standard) is contributing to high food prices are
incorrect," Keith Hennessey, director of the National Economic
Council, said in the same interview.
The White House, embracing biofuels as an alternative to foreign
oil, contends that ethanol use accounts for only up to 3 percent of
the overall increase in global food prices.
Others, including the American Farm Bureau Federation, believe that
it accounts for up to 30 percent of the surge.
U.S. biofuel production relies mainly on corn, but Congress and the
administration want to see other fuel sources, like switchgrass or
woodchips, become commercially viable soon.
About a third of the U.S. corn crop is expected to go to making
ethanol in 2008/09, about four billion bushels, up a third from
last year.
The role of biofuels in rising food prices is receiving
unprecedented attention as the price crunch hits home with U.S.
consumers, already coping with a slowing economy.
Rising prices for basic foodstuffs have also sparked protests and
even riots in parts of the developing world; the United Nations
warns the crisis will deepen hunger.
At home, some members of Congress are calling for a reexamination
of U.S. biofuel policy -- especially the mandate passed last year
to require the U.S. gasoline supply to include 36 billion gallons
of renewable fuels by 2022.
The Bush administration is standing firm, supported by the ethanol
industry and lawmakers from corn states.
At a time of growing hunger, along with record fuel and food prices
that are cutting into aid budgets, many donor nations are also
boosting donations of global food aid.
This month, the administration announced it would seek an extra
$770 million in new food assistance and related funding for fiscal
2009.
It also has been seeking an extra $350 million in supplemental food
aid funds for this fiscal year.
White House spokesman Scott Stanzel, when asked about lawmakers'
plan to allocate more than that in this year's supplemental
spending bill, said Bush would not support a bill larger than its
existing request for $108 billion.





