A global food crisis may "hit us very soon" as a drought ravages
corn crops in the U.S., the world's largest grower, the International
Food Policy Research Institute said.
Governments must act to prevent the crisis,
Shenggen Fan, director-general of the institute, said today. The U.S.
should end its biofuel program that uses
40 percent of its corn output, to boost supplies to meat producers, Fan
said. The Washington- based institute, supported by governments and
international organizations, is part of the Agricultural Market
Information System formed by the United Nations to monitor food costs.
“The major problem is policy,” Fan said today in an interview with Susan Li on Bloomberg Television’s “First Up”. “Biofuel
production has to be stopped. That actually pushed global food prices
higher and many poor people, particularly women and children, have
suffered.”
The price of corn, used in everything from food
to livestock feed to sweeteners, surged to a record $8.49 a bushel on
Aug. 10 and is up 57 percent since June 15. That helped drive up global
food inflation tracked by the UN’s Food & Agriculture Organization
6.2 percent in July from a month earlier, the biggest monthly jump since
November 2009.
Corn gained as the worst Midwest drought in half
a century cut yields in a nation that produced 36 percent of the
2011-2012 world harvest and accounted for 39 percent of global trade in
the grain, according to the U.S. Department of Agriculture.
Ethanol Mandate
Jose Graziano da Silva, director-general of the
FAO, called for a suspension of U.S. government-mandated ethanol
production to allow more of the crop to be used for food and livestock
feed, the Financial Times reported Aug. 10.
Twenty-five U.S. senators and 156 members of the
House of Representatives have called on the Environmental Protection
Agency to halt or lower the mandate on how much ethanol the country must
use this year and the next.
About 4.5 billion bushels (114.3 million metric
tons) of corn was to be used in U.S. ethanol production in the year
beginning Sept. 1, the USDA estimates. That’s almost as much as the
combined forecast output in Argentina, Brazil and Ukraine, the three
biggest shippers after the U.S., and more than global imports of 90.86
million tons estimated by the USDA for the year beginning Oct. 1.
Countries including India and China must release
their food stockpiles to help the poor cope with rising costs, and
governments must refrain from imposing export bans to prevent a repeat
of the global food crisis in 2008, Fan said.
U.S. and French officials plan to hold a
conference call in the last week of August to decide whether to organize
a meeting of the Group of 20 officials to discuss surging grain and
soybean prices, the French Agriculture Ministry said yesterday.
“If we don’t take urgent quick action, another
crisis will hit us very soon,” Fan said. “Governments, the global
institutions like the FAO, the World Bank, and the G-20 need to monitor
the situation, the prices, production, trade and certain policies.”
Copyright 2012 Bloomberg
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