Economists: Ethanol push hurts poor

WASHINGTON, April 3 (UPI) -- The push toward corn-based ethanol has the potential to starve millions around the world, two economists from the University of Minnesota say.

The demand for ethanol has pushed corn prices to record highs, and economists C. Ford Runge and Benjamin Senauer, writing in the April 25 issue of Foreign Affairs magazine, warn that the rise in prices will likely hurt the world's poor.

Energy efficiency should be the Bush administration's mantra, they say, adding that the drive toward ethanol should be tempered until it can be produced efficiently from cellulosic material.

"Resorting to biofuels is likely to exacerbate world hunger," they write in Foreign Affairs. "Several studies by economists at the World Bank and elsewhere suggest that caloric consumption among the world's poor declines by about half of one percent whenever the average prices of all major food staples increase by one percent."

In a 2003 study, the two professors showed that given rates of economic and population growth, the number of hungry worldwide would fall by 23 percent, to about 625 million, by 2025, as long as agricultural productivity improved enough to keep the relative price of food constant. But the rise in the price of foodgrains because of the increased demand for biofuels could lead to more hungry people the world over.

"The number of food-insecure people in the world would rise by over 16 million for every percentage increase in the real prices of staple foods," they write. "That means that 1.2 billion people could be chronically hungry by 2025 -- 600 million more than previously predicted."

Although much of the corn used in the United States is not for human but animal consumption, the demand for ethanol has pushed farmers to grow more corn at the expense of other crops, leading to high poultry and related prices.