U.S. urged to consider effect of ethanol on the poor

By Noel Randewich

MEXICO CITY (Reuters) - The United States should consider spiraling food prices that hurt the world's poor when it sets policies that are funneling much of its corn crop into biofuel production, the World Bank said on Wednesday.

Global food prices for staples like wheat and rice have surged in recent years, causing hunger, riots and hoarding in poor countries. The trend is typically blamed on a combination of factors like higher food consumption in fast growing economies like China, and on bad weather that has hit crops.

But a global push to ramp up ethanol production is also seen pushing prices higher, and World Bank President Robert Zoellick said the United States should take this into account.

"The country has to assess the effect of that on the overall set of humanitarian issues in terms of the price of food products," Zoellick told a news conference in Mexico City.

The U.S. government says corn-based ethanol, which can be used as a substitute for gasoline, can help reduce U.S. dependence on oil from unstable countries.

The U.S. Congress last year passed legislation that would require the country's gasoline supply to include 36 billion gallons of renewable fuels by 2022. At the moment, more than a quarter of the U.S. corn crop is turned into biofuel.

President George W. Bush said last week he still supports the U.S. ethanol push and that the ethanol industry is responsible for only a small part of food inflation.

But Zoellick urged more discussion on the subject. "The biofuel issue is one worthy of analysis and debate," he said.

The World Bank last week pledged along with U.N. agencies to set up a task force to tackle soaring global food prices.

(Writing by Jason Lange)