Former White House economist: more biofuels equals higher food prices

Food & Drink Weekly, April 2, 2007

Increased production of biofuels such as ethanol might help farmers' bottom lines and address climate-change concerns, but it could inflate food prices worldwide, warns a former White House economist. The Associated Press reports that David Sunding, who served on former President Bill Clinton's Council of Economic Advisers and currently an economics professor at the University of California-Berkeley, last week said the combination of rising energy prices and the demand for corn, which is used to produce ethanol, will continue to drive up commodity prices.

"Worldwide, especially in developing countries ... food price increases are definitely something we're going to have to come to grips with," said Sunding. Corn prices have already begun to soar. A rush to turn more acres into corn production could decrease supplies of other commodities, driving up prices of them as well. The resulting higher market prices could then dampen the public's support for government subsidies that are designed to help farmers reap profits when markets are down.

Sunding envisioned a scenario in which price supports for farmers are replaced by another government program: one to purchase food to keep prices affordable and prevent hunger.