GMA blames biofuels for spike in food prices

By Clarisse Douaud

- Last updated on GMT

Related tags: Food, Federal government of the united states, United states congress

The Grocery Manufacturers Association is pinpointing food for fuel
as a major factor in US food price hikes as indexes this week
showed finished food prices are rising at twice the rate of all
other finished goods.

"Federal food-to-fuel mandates have led to over one quarter of corn to be diverted from food to ethanol production, driving up the price of corn and other commodities to historic highs,"​ said Scott Faber, vice president for federal affairs at the Grocery Manufacturers Association (GMA). The US federal government's subsidization of the ethanol industry has come under attack in light of global food shortages and associated price increases. According to the US Department of Energy, the number of ethanol plants more than doubled in the US between 2000 and 2007, while production tripled over the same period. According to the US Department of Agriculture, the country' ethanol capacity in 2006 was 4.4 billion gallons with growth projections of 7 billion gallons for 2010, which critics say will be achieved to the detriment of food needs. "This is an unsustainable pattern that must be addressed; Congress must re-examine food-to-fuel mandates,"​ said Faber. Washington, DC-based GMA lobbies for the interests of its members - global food, beverage and consumer products companies. The US Bureau of Labor Statistics this week released Consumer Price Index data for March 2008, which indicated food and beverage prices rose at a seasonally adjusted rate of 5.1 percent for the first quarter of 2008. "These rates will only increase following the USDA's report that farmers will plant less corn in the coming year,"​ said Faber. The US Department of Labor this week also released its Producer Price Indexes (PPI), further indicating an upswing in prices:"The index for finished consumer foods turned up 1.2 percent in March following a 0.5-percent decrease in February. The index for fresh and dry vegetables jumped 15.4 percent in March after dropping 15.7 percent in the previous month,"​ indicated the department in the PPI. Meanwhile, the country's food bank network, America's Second Harvest, this week called for urgent implementation of the Farm Bill - drafted in 2007 but still held up in Congress - so as to alleviate food banks that are plagued with low stocks due to food and fuel prices. The Farm Bill would in part assist food banks through its Emergency Food Assistance Program and Food Stamp Program. Beyond food and fuel prices, America's Second Harvest also attributes the dire food situation facing America's poor to an almost $200mn drop in federal commodity support for emergency feeding organizations. This it says came about following the enactment of 2002 Farm Bill and a subsequent decline in the need for the government to buy surplus food to support farmers as crop prices rose. "Low-income families are desperately in need of a new Farm Bill to make improvements in the programs that help ensure that they can put food on their tables and lead productive, healthy lives in this nation so richly blessed with food resources,"​ said Vicki Escarra, president and CEO of America's Second Harvest. GMA ties such economic issues to the use of food crops for biofuels. "Before these effects spread further across our economy and around the world, Congress should take immediate action by revisiting food-to-fuel mandates,"​ said Faber.

Related topics: Cereals and bakery preparations

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