February 24, 2011

Clinton: Too much ethanol could lead to food riots

By MARY CLARE JALONICK
ASSOCIATED PRESS

WASHINGTON -- Former President Bill Clinton on Thursday warned farmers not to use so much corn for ethanol fuel that it leads to higher food prices and riots in poor countries.

Clinton told farmers and Agriculture Department employees that he believes producing biofuels such as corn-based ethanol is important for reducing U.S. dependence on foreign oil. But, he said, farmers should look beyond domestic production and consider the needs of developing countries.

"We know that the way we produce and consume energy has to change, yet for farmers there are no simple answers," he said. "There is a way for us to do this and to do it right."

Clinton's foundation has worked to develop agribusiness in African countries such as Malawi and Rwanda.

At the department's annual Agricultural Outlook Forum, chief economist Joseph Glauber said food prices are expected to rise this year and corn use for ethanol will continue to grow. He said 37 percent of all U.S. corn production could be used for ethanol by 2012.

The ethanol industry long has said that its production does not significantly drive up food prices and that the price of corn contributes to a tiny percentage of every food dollar.

"The driver behind rising food prices has been and remains oil," said Matt Hartwig of the ethanol industry group Renewable Fuels Association. "Rising oil prices, even before the unrest in the Middle East and Northern Africa, have made everything we buy from food to clothes to oil more expensive."

Other industries have contended that ethanol contributes to food price spikes, affecting their bottom lines and consumers, too.

After years of boosting ethanol production, Congress has taken an increasingly skeptical look at the fuel as food prices have fluctuated and cutting spending has become a legislative priority.

More than $5 billion in ethanol tax credits were extended at the end of last year as a part of an end-of-session tax deal. But the new Republican House passed two amendments to a spending bill last weekend that would attempt to slow ethanol use.

Even longtime supporters of ethanol in Congress have acknowledged that the country's mood may mean less support for the ethanol industry. Sen. Charles Grassley, R-Iowa, said this week that he would have to "bite the bullet" if he has to decide between cutting the deficit and supporting the House amendments.

Grassley said his priority is to show voters that Congress has gotten the message of fiscal responsibility after the last election.

"I would have to sacrifice almost anything to get to that point," he said.

Glauber said Thursday that ethanol production is currently running at more than 13 billion gallons a year. Congress has required refiners to blend 36 billion gallons of biofuels, mostly ethanol, into auto fuel by 2022.

Clinton said in his speech that biofuels have been debated in a "knee-jerk, one off, fact-free way."

"We need a balanced approach," he said.