(Jun 4, 2007)

Fears that ethanol boom will lead to food shortages overblown

By Todd Benson
From Reuters

SAO PAULO (Reuters) - Fears of world food shortages caused by booming use of sugar cane and corn to produce ethanol fuel for motor vehicles are overblown and politically motivated, analysts and politicians said on Monday.

Ethanol producers in Brazil and the United States have been defending themselves from warnings by Cuban President Fidel Castro and his Venezuelan counterpart Hugo Chavez that growing use of biofuels will worsen hunger in the developing world by encouraging farmers to switch from food crops.

But many agronomists and global political leaders argue that the world has enough arable land to ramp up biofuel production without risking the food supply.

"No serious person can affirm that creating jobs and adding value to existing jobs in the countryside is a risk to the poor people of the world," Felipe Gonzalez, Spain's former prime minister, said at the opening session of a two-day ethanol summit in Sao Paulo, Brazil's business capital.

"This is a false ideological debate," he added, in a swipe at the leftist firebrands Castro and Chavez.

Since ceding power to his younger brother 10 months ago because of health problems, Castro has penned two editorials attacking U.S. plans to increase ethanol production as "genocidal."

Chavez, whose country is a major oil exporter, has said substituting gasoline with ethanol would be "true madness."

Brazil's President Luiz Inacio Lula da Silva, who says he is "obsessed" with ethanol, has dismissed their criticism and defended biofuel production as a way to create jobs in poor rural communities. Brazil is the world's leading producer of sugar cane-based ethanol and a pioneer in the use of biofuels.


Some U.S. economists have voiced concern that a surge in ethanol consumption in the United States could drive up the price of corn, the raw material for ethanol in that country.

But other economists say a temporary surge in corn prices does not portend a food shortage, arguing corn and sugar cane production for ethanol can grow significantly without encroaching on other food crops.

"There is enormous potential for growth because there is so much arable land, especially in Latin America," said Silvia Sagari, who heads the finance and basic infrastructure division at the Inter-American Development Bank.

In Brazil, already the world's largest sugar cane producer, cane accounts for less than 9 percent of the country's total planted area, according to the United Nations.

In Sao Paulo state, the heart of Brazil's sugar and ethanol industry, cane accounts for almost 20 percent of all planted area. But the state also has almost 10 million hectares of unused pasture land, some of which could be turned into cane fields to increase ethanol production.

"There's no need to switch other crops for cane. And there's no need to knock down any trees in the Amazon, because cane doesn't grow well in the jungle," said Jose Goldemberg, who heads the Sao Paulo state government's bioenergy division.

In time, research and development may help ethanol producers squeeze more energy out of each cane stalk. New technologies have helped lift productivity levels in Brazil in the last three decades to about 6,000 liters of ethanol per hectare of cane from 2,000, according to industry data.

"The availability of land is only part of the equation," said Lucia Carvalho Pinto de Melo, president of the Center for Strategic Studies and Management, a research center linked to Brazil's energy ministry.

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