July 25, 2008

ADM, Monsanto intensify food-vs-fuel debate

The US food-versus-fuel debate heated up further as a group of US agribusiness companies led by Archer Daniels Midland Co. (ADM) renewed their stand that technology can ease global supply shortages.

Agricultural-processing company ADM, speaking through the Alliance for Abundant Food and Energy, was joined by seed makers Monsanto Co, chemicals company DuPont Co. and equipment manufacturer Deere & Co.

This continual debate illustrates a great divide in the US agribusiness sector over food and energy policy, especially subsidies for ethanol and other renewable fuels.

The new alliance have long argued that technological improvements would boost crop yields and prevent demand from renewable fuels from hurting food supplies.

However, this view is fiercely opposed by food companies such as Tyson Foods Inc. , who has called for ethanol subsidies to be cut as its profits have been eroded by higher feed costs for its poultry, pork and beef processing business.

Current US renewable fuel policy includes a 51-cent per gallon subsidy on corn-produced ethanol and a tariff on imports, mainly sugar-based ethanol from Brazil.

Executives from the four alliance companies and the Renewable Fuel Association are set to urge lawmakers worldwide "to support agricultural innovation ".

But the lobbying is expected to trigger staunch opposition from other executives in the U.S. agribusiness sector who have called for reform of renewable fuel policy.