World food crisis to last four to six more years

SAO PAULO Thu Apr 10, 2008 12:03pm EDT

A worker shows her paddy at rice field in the Karawang regency, West Java province, Indonesia, April 8, 2008. REUTERS/Beawiharta

A worker shows her paddy at rice field in the Karawang regency, West Java province, Indonesia, April 8, 2008.

Credit: Reuters/Beawiharta

SAO PAULO (Reuters) - High world food prices will not ease for another four to six years, when global grain production should catch up with new demand from emerging countries, a senior Brazilian farm official said.

Adoption of food products like corn and wheat to make fuels have been fingered as one of the main reasons for soaring food prices, which have provoked protests and riots and led governments to impose export restrictions and price controls.

But Brazil's former agriculture minister, sugar cane producer Roberto Rodrigues, told Reuters that although biofuels have contributed to food inflation, they've been unjustly blamed.

He argued the rise in food prices has been caused by a new demand "explosion" in emerging markets like China and India.

"It is the equilibrium between supply and demand that will solve this problem we have today. But the solution won't come soon," Rodrigues said. "It could take four, five, six years."

Demand for food is growing 4.8 percent per year on average in Asian, African and Latin American countries, while it rises 2.6 percent per year in developed markets, he said.

Moreover, crop output was severely hit by drought in the past year in Australia, Europe and South America. World corn, rice and wheat stocks have fallen dramatically, to levels 40 to 60 percent lower than seven years ago, Rodrigues said.

Food is exhibiting a similar rise in price that energy and metals have undergone in past years due to growth in consumers' disposable income in Asia and the emerging markets. But new oil or iron ore production can take 10 years to bring on line.

VILIFICATION

As one of the coordinators of the Inter-American Ethanol Commission, Rodrigues said food and oil companies have opened dual fronts from which to attack ethanol as the reason for food inflation and shortages.

"It seems there's an orchestrated effort, led in part by the U.S. food sector and the oil industry, especially in Europe," Rodrigues said.

"And this is contaminating cane-based ethanol, which doesn't have anything to do with that. I doesn't compete with food."

Rodrigues said cane planting, which has been expanding into degraded pastures, has actually boosted the planting of grains in Brazil, which are used as a rotation crop.

Brazilian ethanol is made from sugar cane, the exact same crop that makes Brazil the world's largest sugar producer and exporter. There is no shortage of sugar in the world, but the image of Brazilian ethanol has already been tainted by food inflation, he told Reuters.

"Pressure has been strong, but I don't think it will destroy the development (of a biofuel market). It will slow down the process -- actually it already has."

ENERGY

In addition to higher food consumption in the developing world, rising oil prices have led to a jump in food transport costs and fertilizer prices. In some cases they more than doubled over the past year.

But world corn, soy and wheat output will expand as high prices stimulate planting around the world.

Until that happens, biofuels should be reinforced as a priority in world energy policy, he said.

"Energy safety is as relevant nowadays as food safety was in the 20th century," Rodrigues said. "Even if oil falls back to $40, the issue now is to safeguard energy supply."

(Editing by Reese Ewing and Jim Marshall)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.