World must rethink biofuel policies to avoid food crises: U.N.

Reuters / Bazuki Muhammad
The U.N. Food and Agriculture Organisation say it wants to reopen the debate on biofuel in order to reduce the risk of another food crisis.

The July surge in prices revealed by the FAO has renewed concerns there may be price rises similar to those in 2007-2008. The 6 percent price hike has mostly affected grain and sugar."

"We are trying to get some international debate going on this subject," the Food and Agriculture Organisation's David Hallam told Reuters.

The UN food agency has called on the United States to suspend its production of ethanol.

Under US law, 40% of the harvest must be used to make bio-fuel. According to the UN this quota could contribute to the global food crisis.

"Our main point is not that there shouldn't be biofuel policies, but that there should be more flexibility", David Hallam said.

The US says producing its own fuel rather than importing it is good for the country.

The US Department of Agriculture (USDA) suggests this year's corn yield will be the lowest since 1995-6. Total production will be the lowest for six years due to the extreme heat and dryness.

USDA is predicting further a price hike with corn reaching between $7.50 – $8.90 per bushel.

According to the director general of FAO suspending the biofuel quota would divert more crops to the production of food.

The US must produce 13 billion gallons of biofuel this year according to law. The country's Renewable Fuel Standard was designed to reduce the effect of gas emissions and dependence on imported oil. The law has long been controversial as many blame the quota for pushing up corn prices.

The United Nations is calling on the quota to be suspended. China, India and France have also expressed concerns about the policy.