The Senate Homeland Security and Governmental Affairs Committee, led by Chairman Joe Lieberman (ID-CT) and Ranking Member Susan Collins (R-ME), today held a hearing titled, “Fuel Subsidies: Is there an Impact on Food Supply and Prices?” The committee heard from witnesses who testified that the increasing price of food is causing an increase in the number of hungry and poverty stricken individuals in the U.S. and throughout the world, and that the rising demand for ethanol is likely a contributing factor in the increased price of food. The committee examined whether U.S. policy, such as that which encourages the production of corn for use in biofuels such as ethanol, should be revisited.
Andrew Siegel, Vice President and Treasurer of When Pigs Fly Bakery in Maine, was among the witnesses to testify before the committee.
Witnesses explained that there are a number of reasons why food prices have increased so dramatically—such as higher food demand in developing countries, higher energy costs, and drought in Australia and the Ukraine-- but that the increased demand for corn-based ethanol is also a factor and one that could be addressed through revised government policy.
According to the World Bank global food prices have increased by 83 percent in the past three years.
Siegel testified that over the past few months, the price he pays for wheat has increased from $7,700 per week in September 2007 to more than $22,000 in February of 2008, causing a financial hardship on his family-owned business. He said that ethanol policy is a factor in food prices and that that government should look at other potential sources of ethanol, such as switchgrass.
Senator Collins said, “The impact of rising prices, food shortages, and export restrictions has had devastating consequences for the billion people around the world living in dire poverty. The subsidies for ethanol production, tariffs on ethanol imports, and mandates for ethanol use have certainly had an impact on the U.S. corn crop and food prices. It is incumbent upon us to examine the impact that American biofuel policy is having on the global food crisis and whether our policy needs to be adjusted to mitigate unintended consequences in the United States and elsewhere.”
Senator Lieberman said, “The confluence of events – poor harvests, reductions in exports, increasing food consumption, high oil prices, and federal ethanol subsidies - has had a dramatic impact on food prices as events spin off one another, creating a cycle of rising demand, dwindling supplies, and unstable prices. If you are poor, the effects can be deadly. The testimony today has shown that we must carefully consider the consequences of our policies, and I am committed to further examination of the causes of and solutions to higher food prices so that Congress can act in the most responsible manner for American consumers.”
In her opening statement, Senator Collins explained that in 1997, only 5 percent of the corn harvest was used for ethanol production. That portion grew to 20 percent of the 2006 harvest. The U.S. Department of Agriculture estimates that 24 percent of last year’s corn crop is currently being used for ethanol, and that ethanol’s claim on the 2008 harvest will climb to 33 percent.
Other witnesses included; Dr. Bruce Babcock, Director Center for Agricultural and Rural Development, Iowa State University; the Reverend David Beckmann, President, Bread for the World; and Dr. Mark Rosegrant, Director, Environment and Production Technology Division, International Food Policy Research Institute.
(Senator Collins is shown here with Siegal)
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