Govts not biofuels cause food woes - PotashCorp

24 April 2008 20:02  [Source: ICIS news]

HOUSTON (ICIS news)--Current world food shortages were caused by policy inaction by governments rather than biofuels, and government responses were doing more harm than good, PotashCorp CEO Bill Doyle said on Thursday.

Ethanol "is the most popular whipping boy in the agricultural world right now", but only because it is a convenient target, Doyle told analysts during a quarterly earnings conference call.

After having been asleep while the crisis was brewing, "governments are making the situation worse, not better", he said.

Doyle did not identify any specific countries but cited policy responses aimed at limiting exports, which would discourage farmers in those countries from growing more.

Blaming biofuels "would be a gross misunderstanding of the world food situation", in which 95% of crops are going into food, Doyle said.

However, the US push for ethanol and biodiesel may need to be soft-pedalled if there were a new factor such as a drought in North America, Doyle conceded.

The current crisis in the global food supply was indeed real, Doyle said, adding that it was "unbelievable" that rice was being rationed at bulk retail outlets operated by Costco and Sam’s Club (a division of Wal-Mart), as has been widely publicised in US media.

"It's a very, very serious situation, being exacerbated by governments," Doyle said.

Populous countries like India and China would ultimately do what they needed to do in terms of subsidising food so people can eat, but that would in turn be harmful because it would distort the market price signal needed to get farmers to lift their yields, Doyle said.

Earlier on Thursday, PotashCorp said its first-quarter operating profit more than doubled from a year earlier on increased demand for its potash, phosphate and nitrogen-based fertilizer products.

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