Kenya, Pakistan at Rising Hunger Risk: Anti-Ethanol Groups

Kenya, Pakistan and Nicaragua are among countries that face increased risk of greater hunger because of rising food prices, according to two advocacy groups that oppose the use of grain to make fuel.

Those countries, along with much of sub-Saharan Africa and South Asia, are “more vulnerable” based on the size of their price rises, reliance on imports and availability of government aid, according to a report from the Environmental Working Group and ActionAid USA. Increased biofuels use is helping push world corn inventories as a percentage of use to their lowest level since 1974, the groups said.

“We need to break up with biofuels,” Marie Brill, a senior policy analyst with ActionAid, said today at a news conference in Washington. Brill called for an end to U.S. ethanol subisidies as a way to “save people and the planet.”

Global food prices rose to a record in February and grain costs may continue to climb in the next several months, with only rice keeping the world from a repeat of 2008, when dozens of food riots broke out in third-world nations, the United Nations said today.

An index of 55 food commodities rose 2.2 percent to 236 points from 230.7 in January, the eighth consecutive gain, the UN’s Food and Agriculture Organization said today. Wheat surged 61 percent on the Chicago Board of Trade in the year that ended yesterday, and corn gained 89 percent, while rice added just 2.6 percent.

High levels of hunger and political unrest do not necessarily go hand-in-hand, Brill said, citing other factors including distrust of the government and levels of repression.
Rising Food Prices

Rising food costs have contributed to unrest across northern Africa and the Middle East in the last several months that toppled leaders in Egypt and Tunisia. Prices surged as adverse weather ruined crops from Canada to Australia, and Russia banned grain exports after its worst drought in a half- century.

World grain production in 2010-2011 is forecast to drop 1.1 percent to 2.24 billion metric tons, the UN agency said, compared with December’s outlook for 2.23 billion tons. It estimated cereal usage at 2.28 billion tons, exceeding production.

The U.S. provides blenders of ethanol with a 45-cent per gallon tax credit, while imposing a 54-cent a gallon tariff on imports of the biofuel. Congress has also approved an escalating mandate on how much of the fuel must be used annually to support the industry.

source: bloomberg