[Congressional Record (Bound Edition), Volume 154 (2008), Part 5]
[House]
[Pages 6050-6051]
[From the U.S. Government Publishing Office, www.gpo.gov]




                THE REAL CULPRIT FOR RISING FOOD PRICES

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Ohio (Ms. Kaptur) is recognized for 5 minutes.
  Ms. KAPTUR. Madam Speaker, the world is beginning to understand what 
my constituents have known for far too long, higher food prices and 
higher commodity prices are destroying prosperity for millions and 
millions of people here at home and abroad. Whether there is a hungry 
person in Toledo, Ohio or in Haiti, the rising costs of basic food are 
really placing the world's marginalized and poor in even a tighter 
squeeze.
  Getting in the front of devastation that higher commodity prices can 
cause is a challenge to all of us. While I am pleased that the leaders 
of the International Monetary Fund and the World Bank have called for 
half a billion dollars more to feed the poor of the world, I'm deeply 
troubled that these leaders have pointed to the same tired rhetoric in 
diagnosing the cause of these rising prices. It's been very interesting 
for me to hear them say they're blaming higher food prices on the 
production of ethanol and biodiesel in agricultural America, which is 
actually a new value-added market for our farmers. It's actually a new 
market that's taking land that is just laying fallow for years, where 
we have paid commodity payments and gotten nothing, now we are 
beginning to reuse some of that land again.
  The real culprit for rising food prices is rising oil prices. Our 
world is facing a crisis precipitated by the greater competition for 
dwindling supplies of world energy that has caused all the prices of 
basic goods to skyrocket. But instead of dealing with that reality of 
how oil is embedded in every aspect of life in this country and 
globally, they're trying to blame this on the new developing market of 
renewable energy.
  Yes, under current technology biofuels consume some food stocks for 
the production of fuel. Corn has been utilized by some ethanol 
producers, for example. But to claim that biofuels are the cause of 
rising food prices, that's disingenuous at best. Look to the rising oil 
prices at over $113 a barrel, and this oil-dependent economy must 
become energy independent here at home again. And renewable fuels based 
in agriculture are a part of the solution for this country in the 
world.
  Take a look at the rising cost of fertilizer that can be directly 
attributed to the increasing cost of natural gas and smaller crop 
sizes. According to the recent Texas A&M Agriculture and Food Policy 
Center analysis, rising fertilizer costs have led to a $3 million acre 
reduction in planted corn in the 2006, 2007 crop year.
  Let's look at another major cause globally of why food prices are 
going up: Drought. World food production has gone down because in 
Australia and eastern Europe, and because of poor weather in Canada and 
western Europe and Ukraine, we've seen overall production reduced. With 
such world stocks for wheat at 30-year lows, buyers are turning to the 
United States for supplies. Has the IMF offered suggestions to these 
nations for dealing with the drought that global warming is causing? 
No. They're just blaming America's farmers.
  Higher incomes around the world are boosting demand for processed 
foods in countries such as India and China. And this higher demand has 
skyrocketed the need for products produced across the supply chain. 
Now, has the IMF sought to better manage the uncontrolled growth in 
developing countries? No. They're just blaming America's farmers.

                              {time}  1915

  With the U.S. dollar in free fall, American agricultural goods have 
become extremely attractive internationally and have placed great 
demand on foodstuff production domestically. With greater competition 
for food, with more U.S. exports, our weak dollar due to terrible 
economic policies here at home has decreased the power of Americans to 
purchase food produced right here in our country. Has the IMF 
identified the weak dollar as the challenge to millions of Americans 
faced with food shortages? Of course not. They just blame the U.S. 
farmer and the new developing market of biofuels.
  With the price of oil reaching over $110 a barrel, the world's 
addiction to oil is driving up the production costs of agricultural 
products. How much do you think it costs to haul a truckload of bell 
peppers from Salinas Valley in California to Cleveland, Ohio?
  I cannot accept IMF's wanton attack on the investment in rural 
America. If we follow their formula, we would not be growing any food 
domestically. If we were following IMF's advice, we would not be 
developing the infrastructure and capacity to produce our own renewable 
energy here at home and help lead the world in a real energy-
independent transformation of this country.
  Madam Speaker, Americans simply must commit to cutting off our oil 
addiction and restoring energy independence here at home.

               [From IMF Survey Magazine, Apr. 10, 2008]

     Food Price Rises Threaten Efforts To Cut Poverty--Strauss-Kahn

       Higher food prices have particularly adverse effect on the 
     poor.
       Projections show nearly all African countries suffering 
     food price shocks.
       IMF Spring Meetings to discuss global strategy on food 
     price crisis.
       A rise in food prices of 48 percent since end-2006 is a 
     huge increase that may undermine gains the international 
     community has made in reducing proverty, IMF Managing 
     Director Dominique Strauss-Kahn warned.
       He told an April 10 news conference in Washington that 
     policy responses to higher food prices have to be tailored to 
     meet the needs of each country.
       Strauss-Kahn said the IMF could take four steps to help 
     address higher food prices in the short term:
       Support countries in designing appropriate macroeconomic 
     policies to deal with shocks; provide advice and technical 
     assistance for countries where rising food prices are eroding 
     terms of trade, through targeted income support for the 
     poor--without jeopardizing hard-won gains on economic 
     stabilization; in countries where price shocks are affecting 
     the balance of payments, provide assistance through IMF 
     lending facilities, and work, along with other agencies and 
     donors, to help countries mitigate negative impacts.


                          Open trade policies

       Longer-term answers to the problem of higher food prices 
     centered on removing obstacles to increased supply, Strauss-
     Kahn said.
       The IMF cites increased trade as a policy option for 
     mitigating the effects of higher commodity prices on national 
     economies. IMF chief economist Simon Johnson told an April 9 
     World Economic Outlook briefing: ``As a way to reduce global 
     pressure on food and energy prices, more open trade policies 
     in those products would be a good start. Less insular 
     biofuels policy in advanced economies would help relieve some 
     pressure. At the same time, we encourage countries to avoid 
     raising taxes or imposing quotas on their food exports. These 
     reduce incentives for domestic producers and also increase 
     international prices.''


                          Impact on inflation

       IMF research shows that higher prices for food pose new 
     challenges for African policymakers and could have 
     particularly adverse effects on the poor. Because food 
     represents a larger share of what poorer consumers buy, a 
     global increase in food prices has a bigger impact on 
     inflation in poorer countries.
       IMF studies show the rise in food prices reflecting a 
     mixture of longer-term factors

[[Page 6051]]

     such as food crops being diverted to biofuel production; 
     higher food demand from emerging economies; and higher energy 
     and fertilizer costs. Temporary factors, such as droughts, 
     floods, and political instability, also contributed to higher 
     food prices.
       Strauss-Kahn displayed a map at the press briefing that 
     showed the impact of projected food price increases on global 
     trade balances.
       ``Almost all African countries have a negative impact from 
     these food prices,'' Strauss-Kahn told the briefing. A 
     problem in trade balances meant problems in current accounts. 
     Problems in current accounts meant problems that the IMF 
     could help address, he said.
       New projections on the effects of higher food prices follow 
     publication of a World Bank-IMF report warning that most 
     countries will fall short on the Millennium Development 
     Goals, a set of eight globally agreed development targets 
     that the international community is aiming to achieve by 
     2015. The report said that though much of the world is set to 
     cut extreme poverty in half by then, prospects are gravest 
     for the goals of reducing child and maternal mortality, with 
     serious shortfalls also likely in primary school completion, 
     nutrition, and sanitation goals.


                         New kind of imbalance

       In Africa and Asia the effect of higher food prices would 
     have to be seen not only in terms of undermining the efforts 
     to fight against poverty but also as representing a new kind 
     of macroeconomic imbalance, Strauss-Kahn said. For a large 
     part of Africa, a shock could be expected that was as big as, 
     and maybe bigger than, previous shocks.
       Strauss-Kahn welcomed an initiative launched by U.K. Prime 
     Minister Gordon Brown that urges the IMF, the World Bank, and 
     the United Nations to develop a global strategy to address 
     higher food prices. ``The initiative taken by Gordon Brown is 
     perfectly timely, We need now to consider the rise in food 
     prices as something which is not just happening for one or 
     two months but as probably more structural,'' Strauss-Kahn 
     said.
       The Brown proposal would probably be on the agenda of the 
     IMF-World Bank Spring Meetings and of the ministerial meeting 
     of the Group of Seven industrial countries, he added.

     

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