Bush backs ethanol despite concern about food costs

By Russell Blinch

WASHINGTON (Reuters) - President George W. Bush said on Tuesday he is deeply concerned about high food prices but believes ethanol production is responsible for only a small part of food inflation.

"In terms of the international situation, we are deeply concerned about food prices here at home, and we're deeply concerned about people who don't have food abroad," Bush told a news conference.

He said the rise in food prices has been caused by weather, increased demand and energy prices, while only a small part is due to the production of corn-based ethanol.

"And the truth of the matter is, it's in our national interest that we -- our farmers -- grow energy, as opposed to us purchasing energy from parts of the world that are unstable or may not like us."

Aid workers and other groups contend diverting more than a one quarter of America's corn harvest is driving up grain prices, making it more expensive to feed livestock and further driving up food prices for the world's poor.

Bush said the long-term solution to concerns about corn prices is to switch to cellulosic ethanol that uses grasses and other non-food sources as fuel source.

Some critics contend it will take too long to make the switch to cellulosic inputs. A leading agriculture research group said on Tuesday that a moratorium on grain-based biofuels would help reduce crop prices substantially.

"Our models analysis suggest that if a moratorium on biofuels would be issued in 2008, we could expect a price decline of maize by about 20 percent and for wheat by about 10 percent in 2009-10. So it's this significant," Joachim von Braun, heads of the International Food Policy Research Institute, told reporters in a briefing.