UPDATE 2-France seeks biofuels pause in global food strategy

Wed Sep 12, 2012 12:19pm EDT

* France pushes for worldwide pause in biofuel growth

* Biofuels push joins Hollande's call for strategic food stockpile

* France says will mobilise G20 for better farm coordination

By Elizabeth Pineau and Sybille de La Hamaide

PARIS, Sept 12 (Reuters) - A French plan to fight food price volatility took further shape on Wednesday with a call to pause global development of biofuels, just a day after President Francois Hollande pushed for creation of strategic food stocks.

"(France) will push for a pause in the development of biofuels competing with food," a government spokeswoman said after a cabinet meeting on Wednesday.

The plan is forming in response to the third global food price spike in four years, this time sparked by the worst U.S. drought in over half a century and persistent dry conditions in other key cereal producing areas that revived memories of unrest from 2007/08's food emergency.

French President Francois Hollande on Tuesday said he was in talks with other heads of state to launch strategic stockpiles of agricultural commodities, one of the boldest measures yet to tame volatile food prices.

Although it was unclear whether Hollande would succeed in convincing major players such as the United States or China to agree on strategic food stocks, potentially a difficult and costly challenge, some EU members already backed the French initiative.

"Italy supports France's proposal to create strategic stockpiles of agricultural commodities," said Giuseppe Di Rubbo, a director at the Italian agriculture ministry, adding that the ministry was drawing up a new regulation to share data on stocks at Italian companies with the European Union and the G20.

The farm ministry also said France would "relaunch with the (United Nations') FAO (Food and Agriculture Organization) initiatives to produce more and store better to meet emergency situations."

BIOFUELS

The biofuels move is in line with a bid by the European Union executive to impose a limit on the use of crop-based biofuels over fears they are less climate-friendly than initially thought and compete with food production, as shown in draft EU legislation seen by Reuters.

The European Commission's plan still needs to be approved by EU government and lawmakers.

Biofuels are made mostly of grains and oilseeds. Prices soared to record highs this year due to drought in the U.S. Midwest and the Black Sea region.

Internally, France already plans to cap at 7 percent -- the current level -- the use of crop-based biofuels in fuels, a read-out of a cabinet meeting showed.

The UN's FAO called last month for a relaunch of the debate on biofuel policies and for a look at ways to make them more flexible to reduce the risk of food crises and stepped up the pressure on the United States to change its biofuel policies.

Under the five-year-old Renewable Fuels Standard (RFS), U.S. fuel companies are required to ensure that 9 percent of their gasoline pools are made up of ethanol this year, which means converting some 40 percent of the corn crop into the biofuel.

France's calls to ease so-called first generation biofuels, also widely used in sugar cane-based ethanol in Brazil, is a new sign of the country's efforts to prevent price spikes.

France also repeated it anticipated that an emergency meeting of the G20 members to ensure good coordination of policies between large producing countries was possible.

However, a decision would not be taken until later in the month and would be based on the key U.S. government grains supply and demand report released on Wednesday.

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