White House sees food prices high for 2-3 years

WASHINGTON (Reuters) - High global food prices are likely to linger for two to three years while the world replenishes food stocks, senior White House officials said on Tuesday.

"Our estimate is that those prices will continue to stay high, not escalate at the same rate as they did last year," Edward Lazear, chairman of President George W. Bush's Council of Economic Advisors, said in an interview.

"Inventories have been depleted and it will take a while to rebuild those inventories, so those prices will stay high," likely for two to three years, he said.

Disappointing harvests, surging demand in developing countries like China and other factors have sent global commodity and food prices sky-rocketing over last year.

Biofuel production is widely seen as another driver in higher food prices, which jumped 43 percent in the year through March. The White House experts underscored that they did not think alternative fuels like ethanol truly play a big role in higher food costs.

"Those who are arguing that the president's increase in the (renewable fuels standard) is contributing to high food prices are incorrect," Keith Hennessey, director of the National Economic Council, said in the same interview.

The White House, embracing biofuels as an alternative to foreign oil, contends that ethanol use accounts for only up to 3 percent of the overall increase in global food prices.

Others, including the American Farm Bureau Federation, believe that it accounts for up to 30 percent of the surge.

U.S. biofuel production relies mainly on corn, but Congress and the administration want to see other fuel sources, like switchgrass or woodchips, become commercially viable soon.

About a third of the U.S. corn crop is expected to go to making ethanol in 2008/09, about 4 billion bushels, up a third from last year.

The role of biofuels in rising food prices is receiving unprecedented attention as the price crunch hits home with U.S. consumers, already coping with a slowing economy.

Rising prices for basic foodstuffs has also sparked protests and even riots in parts of the developing world; the United Nations warns the crisis will deepen hunger.

At home, some members of Congress are calling for a reexamination of U.S. biofuel policy -- especially the mandate passed last year to require the U.S. gasoline supply to include 36 billion gallons of renewable fuels by 2022.

The Bush administration is standing firm, supported by the ethanol industry and lawmakers from corn states.

At a time of growing hunger, along with record fuel and food prices that are cutting into aid budgets, many donor nations are also boosting donations of global food aid.

This month, the administration announced it would seek an extra $770 million in new food assistance and related funding for fiscal 2009.

It also has been seeking an extra $350 million in supplemental food aid funds for this fiscal year.

White House spokesman Scott Stanzel, when asked about lawmakers' plan to allocate more than that in this year's supplemental spending bill, said Bush would not support a bill larger than its existing request for $108 billion.

(Editing by David Gregorio)