Biofuel Battle Highlights U.N. Food Summit

Leaders gathered at a three-day U.N. summit on the world's food crisis have quickly laid out their disagreements over a key issue: how much the rush for environmentally friendly biofuels is contributing to the rocketing prices that are causing hunger and unrest around the globe.

Most countries and international organizations meeting at the Rome-based U.N. Food and Agriculture Organization cite multiple causes, including rising energy costs, more demand for meat and dairy products from some booming developing countries, trade restrictions, speculation as well as the increased demand for biofuels.

But how much each factor contributes was wildly debated as the summit opened on Tuesday.

Discussion of whether to scale back or push ahead with the introduction of biofuels is likely to weigh heavily on attempts to come up with a global strategy to solve the crisis.

"It is frightening to see attempts to draw a cause-and-effect relationship between biofuels and the rise of food prices," said the president of Brazil, whose country's sugar cane has long been used to produce ethanol that fuels cars and trucks.

"It offends me to see fingers pointed against clean energy from biofuels, fingers soiled with oil and coal," said Luiz Inacio Lula da Silva, as he delivered an impassioned defense of biofuels.

Fuels made from sugar cane, corn and other crops have been seen as a way to combat climate change and rising oil prices. The United States has been heavily subsidizing corn-based ethanol production. Last year the 27-nation European Union endorsed a plan calling for biofuels to make up 10 percent of the fuel for road vehicles by 2020.

But environmentalists, international groups and some countries are becoming increasingly wary of biofuels, which they say could accelerate global warming by encouraging deforestation - and contribute heavily to the commodities price hike by diverting production from food crops to biofuel crops.

Studies by international organizations, including the International Monetary Fund, show that the increased demand for biofuels is contributing by 15-30 percent to food price increases, said Frederic Mousseau, a policy adviser at Oxfam, a British aid group.

"Food stocks are at their lowest in 25 years, so the market is very vulnerable to any policy changes" such as U.S. subsidies and the EU's mandate on greater use of this energy source, Mousseau said.

"In some cases, biofuel production is in competition with food supply," Japanese Prime Minister Yasuo Fukuda told the Rome summit on Tuesday. "We need to ensure that biofuel production is sustainable."

Fukuda said countries must speed up the research and introduction of second generation biofuels, which can make fuel out of various plants and not just food crops.

While agreeing that sustainability and innovation are needed, U.S. Agriculture Secretary Ed Schafer insisted that biofuels contribute only 2 or 3 percent to a predicted 43 percent rise in prices this year.

"The use of sustainable biofuels can increase energy security, foster economic development especially in rural areas, and reduce greenhouse gas emissions without weighing heavily on food prices," Schafer said in his address.

Last month, the U.S. Congress enacted a farm bill that reduced a tax credit for refiners by about 10 percent per gallon. The credit supports the blending of fuel with the corn-based additive. More money would go to cellulosic ethanol, made from plant matter.

But even among countries like the United States and Brazil which are trying to largely exonerate biofuels of the charge of raising food prices, there was little agreement on the best way to tap the energy source.

Brazil's president lashed out at the U.S. approach, saying that corn-based ethanol is less efficient than the fuel produced with sugar cane and that the former can only compete "when it is shored up with subsidies and shielded behind tariffs."

Ron Litterer, an Iowa corn farmer and president of the U.S. National Corn Growers Association, said that as technology develops, the gap in efficiency between corn and sugar cane will narrow and that subsidies are slowly being reduced as the industry grows.

"Brazil also had subsidies when it was developing its ethanol industry," Litterer told The Associated Press by telephone. "Over time our subsidies will be further reduced and could eventually even disappear."