US: May 9, 2008


WASHINGTON - A senior World Bank official said on Thursday that countries should not greatly increase biofuels production until there is more clarity about how much they have contributed to the global food price crisis.


Juergen Voegele, director for agriculture and rural development department at the World Bank, cautioned against shifting a lot of the blame to biofuels but also said massive subsidies for the biofuel industry was not helping the crisis.

"We don't think it's advisable to vilify biofuels and make it responsible for all evil at the moment, nor do we think we can continue to support biofuels the way it is supported at the moment in many countries," Voegele told Reuters.

He said the World Bank was analysing biofuels on several fronts, including its economic, environmental and social value.

"The interlinkages with food production are complex, and we need to get a much better understanding of what is sustainable in the long run," said Voegele. "There are a lot of expectations that second and third-generation biofuels will have better economic, environmental and social balance sheets."

Experts blame the food crisis on the conversion of land to grow crops for biofuel, as well as drought, changing diets in fast-growing developing countries and more expensive fuel.

Riots in poor Asian, African and Latin American countries have followed the steep rise in food prices, which has also prompted governments to revert to old and potentially damaging controls.

Anti-poverty activists argue that the biofuels industry is exacerbating the crisis by diverting needed crops, while a leading US-based agricultural research group has called for a moratorium on grain- and oilseed-based biofuels to help cut crop prices substantially.

The Bush administration has defended its corn-based ethanol policy, saying it accounts for somewhere between 2 percent and 3 percent of the overall increase in global food prices.

"This is a debate that is taking place right now; different models give us different results and it will take us time to figure this out, but we are actively studying it," Voegele said.


NO RESPITE SOON

Still, he said the World Bank did not expect the crisis to ease any time soon, and the development agency was advising between 30 to 50 countries on ways to deal with higher prices, cautioning them against actions that disrupt supplies.

"Overall, we see supply responses in all these crops, but it's also not going away very quickly," he said, noting that increased supplies had lowered wheat prices over the past six weeks, although they remained at historical highs.

Voegele said the World Bank had warned for several years about increasing food price volatility but "no one can claim they saw this coming the way it has actually happened."

World Food Program Executive Director Josette Sheeran has referred to the crisis as "the silent tsunami" that threatens to plunge more than 100 million people on every continent into hunger.

Voegel said the crisis was not as much about shortages as it is about countries, especially in the developing world, struggling to deal with sharply higher prices.

He said there were "clear indications" that global grains stocks are too low and need to be rebuilt.

Voegele said there were measures being taken to urgently deal with the crisis and said the World Bank welcomed statements by Southeast Asia nations on cooperation on rice.

"We really hope the rice-producing countries and the rice-consuming countries -- they overlap to a large extent -- get together and work out trading arrangements that are beneficial at the regional and global level, and we certainly see that happening," he added.

Voegele said the food crisis had highlighted the need for governments to rebuild agricultural sectors, which have been neglected over the years because food prices were low.

"I think it's a wake-up call and we certainly think the international community needs to invest more in international agricultural research to get more productivity increases in the next few years, to allow countries to climate-proof their agriculture," he added.

(Reporting by Lesley Wroughton; Editing by Jonathan Oatis)


Story by Lesley Wroughton


REUTERS NEWS SERVICE