June 21, 2011 / 7:00 AM / 8 years ago

Biofuels are job creators, not hunger villian: U.S.

WASHINGTON (Reuters) - Biofuels are a “tremendous job creator” for rural areas, said U.S. Agriculture Secretary Tom Vilsack on Monday, ahead of a global meeting where the farm-grown fuels may be criticized as a factor in high food prices.

Jatropha seeds, the oil of which is used to produce biofuel, are seen in Chiapas April 1, 2011. REUTERS/Henry Romero

Later this week in Paris, agriculture ministers from the Group of 20 rich nations are expected to agree to share data on crop output and supplies more widely, as a step to calm volatile commodity markets, Vilsack told reporters.

Vilsack said, the United States has doubts about creating regional food caches for emergency use—one step suggested for G20 countries’ to consider for alleviating hunger. Some 925 million people, roughly one-in-seven, are chronically hungry. Global food prices are at near-record highs.

Biofuels, especially ethanol distilled mainly from corn (maize) in the United States, have been blamed for driving up food prices. Vilsack says, biofuels’ role in price spikes is small and the fuels boost farm income and spark rural growth.

“This is a tremendous job creator,” he said.

International charity Oxfam said, G20 nations should scrap “damaging” biofuel subsidies and mandates on the grounds that they add to price volatility and global warming.

Before joining his G20 colleagues, Vilsack plans to go to the Paris Air Show to discuss biofuels for aircraft. U.S. researchers are looking at switch grass, miscanthus and algae as sources of jet fuel and “drop-in” motor fuel.

Last week, USDA said, it would share the cost with farmers in Arkansas, Missouri and Pennsylvania to grow miscanthus, a kind of grass.

This year’s U.S. ethanol production is forecast at 13.5 billion gallons, or 51 billion liters, 7 percent more than required. High oil prices make ethanol an attractive alternative fuel. The United States is the No. 1 ethanol maker and Brazil is No. 2.

“My belief is, we will come out of the meeting with a strong communique,” said Vilsack in a preview of issues.

Along with endorsing more transparency for crop data, G20 ministers will oppose export bans, he said, and focus on areas where agricultural research and support for local food security will pay off.

“I suspect my feelings are pretty similar to other countries,” he said, in arguing the farm ministers should stay out of commodity market regulations.

On food reserves, Vilsack said, the United States is concerned about how the stockpiles would be managed and how to prevent manipulation. In the United States, government-held stockpiles were accompanied by low prices for decades.

In a report, Oxfam said, the G20 ought to support national and regional food reserves in developing countries and buffer stocks managed transparently. Oxfam said a global grain reserve of 105 million tonnes would have helped avoid the food price surge of 2008. The cost of the reserve would have been $1.5 billion, it said.

Reporting by Charles Abbott; Editing by Carole Vaporean

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