August 23, 2007

Cargill seeks US biofuel escape clause for food prices

Agricultural giant Cargill Inc. has called for any new US renewable fuel mandates to have an "escape mechanism" to prevent soaring demand for crops from distorting food supplies and markets, The Financial Times (FT) reported Wednesday on its Web site.

The company has been the most outspoken industry advocate of the need for policymakers to intervene in the emerging food-versus-fuel debate at a time when heavily tax-incentive-based investment in biofuels has pushed up global food prices, the newspaper said.

The US is reviewing its federal Renewable Fuel Standard, which calls for the production of 7.5 billion gallons a year of alternative fuels by 2012, the FT said. This is expected to be reached well ahead of target, and the Bush administration has called for a benchmark of 35 billion gallons by 2017, about half of it from ethanol.

Bill Veazey, Cargill's chief financial officer, told the FT there needs to be "some kind of waiver" in any state-backed mandate. "There needs to be escape mechanisms so that you don't distort the food markets."