High food prices not going away soon: feds
AGRICULTURE DEPT. | Biofuels absorb crops, driving costs up
The Agriculture Department's chief economist told Congress Thursday that prices for corn and other food commodities will remain at ''historically high levels'' in coming years as the U.S. ethanol industry expands.
Congress' Joint Economic Committee met to discuss the causes behind surging food prices that have set off riots abroad and grocery store sticker shock in America.
(AP)
Joseph Glauber, chief economist for the Department of Agriculture, said that if biofuels like ethanol continue absorbing more U.S. crops, prices for soybeans and other staples will rise, including the grains used to feed livestock. Droughts, increased demand for food in developing countries and higher fuel costs have greatly contributed to current food prices, he said. Eventually, food price inflation will slow, Glauber said, assuming weather patterns return to normal and plantings increase.
But lawmakers are worried about the short-term impact on consumers and the economy.
Tom Buis, the president of the National Farmers Union, whose members have been enticed to grow more corn, argued that biofuel production has had little impact on rising food prices. Instead, he pointed at $120-per-barrel oil, which has made it more expensive to cultivate land and ship crops to market.
''While ethanol production is being characterized as the root of all evil, the oil and gas industry continue to receive billions of dollars from the federal government while major oil companies make record profits,'' Buis said.
Still, some lawmakers are reconsidering the heavy promotion of ethanol as an alternative to gasoline.