Economist: Trim use of biofuels

By Aoife White, Associated Press

Tuesday, May 6, 2008

The U.S. and European Union should reconsider a shift to biofuels that has helped increase food prices worldwide by turning agricultural land over to energy crops, American economist Jeffrey Sachs said Monday.

Targets to produce more fuels that release less carbon dioxide when burned "do not make sense now in a global food scarcity condition," Sachs, a special adviser to the United Nations, told reporters before he spoke to EU lawmakers at the European Parliament.

"In the United States, as much as one-third of the maize crop this year will go to the gas tank and this is a huge blow to the world food supply, so these programs should be cut back significantly," he said.

Top international food scientists recommended last month that the use of food-based biofuels, such as ethanol, be halted, saying that would cut corn prices by 20 percent during a world food crisis.

So far, the U.S. biofuels program has had more impact on food shortages, but Europe's plans to rapidly boost output of biofuels in coming years would also start to bite, Sachs said.

"Neither of them makes much sense actually in terms of the environmental effect, the energy balance, or the food impact, so I would advocate a reconsideration of both under the new market conditions," he said.

European Commission spokesman Michael Mann insisted that biofuels were not a significant factor in pushing up food prices.

More important are recent poor global harvests, growing food demand in Asia and export restrictions in Ukraine and Russia, he said.

"In Europe, we use less than 2 percent of our cereals production for biofuels, so their contribution to higher food prices is marginal, if not nonexistent," Mann said.

Mann said the EU did not expect replacing 10 percent of all transport fuel with biofuels by 2010 to affect future food prices because Europe planned to increase the amount of land under cultivation and use crop waste, such as straw, to make some biofuel to meet the target.

But Sachs insisted that biofuels in Europe were hitting the food supply to a "modest extent" because some wheat is turned into ethanol and "land is diverted from grains to rapeseed and other inputs for biodiesel."

The U.S. ethanol industry also rejects claims that biofuels are responsible for food price increases, saying ethanol - made from wheat and sugar cane - and other biofuels account for just 4 percent of the price surge.

The Department of Agriculture puts the figure closer to 20 percent.