WASHINGTON (Reuters) - Drought in the
U.S. farm belt may result in higher prices for poor people around the world,
according to the head of an agricultural think tank who on Monday also
recommended a halt to ethanol production from corn.
Shenggen Fan, director general of the
International Food Policy Research Institute, said the global spike in food
prices in 2008 showed how poor crops and tight supplies have wide impact. IFPRI
is the analytical arm of a coalition of agricultural research facilities.
Fan suggested six steps to rein in prices and
head off out-of-control prices caused by this year's drought.
More than 60 percent of the continental
United States, including prime grain territory, is under moderate to exceptional
drought. The Agriculture Department was scheduled to make its first estimate of
the fall harvest on Friday. Some private analysts say the corn crop could be
the smallest in a decade.
"Food crop demand for biofuels,
particularly in the United States and European Union must be cut substantially,
as should mandates for ethanol content in fuel, to help relieve the pressures
on both domestic and global food markets," Fan said in a release.
Ethanol production accounts for about 40
percent of the U.S. corn crop.
He also urged nations to avoid export bans,
to be ready to use their stockpiles to address food emergencies, and continued
aid to expand food production in developing countries.
The United States is often the world's
largest exporter of corn, wheat and soybeans, so this year's drought would be
felt among its overseas customers as well as at home, where food prices are
forecast to rise. For example, Mexico and Egypt are among the four largest
buyers of U.S. corn, said Fan.
"Poor and vulnerable groups in developing
countries are hard hit by high and volatile prices of the agricultural
commodities they depend on for their primary daily caloric intake," Fan
said. "As experienced during the 2007-08 global food price crisis, price
movements in domestic markets can have significant impacts on global markets,
and vice versa."
World food prices fell for the past three
months and are 15.4 percent below the record set in February 2011 on a price
index calculated by the U.N. Food and Agriculture Organization. The FAO was
scheduled to update the index on Thursday. FAO said deteriorating U.S. crop
prospects bolstered grain prices in late June.
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