July 28, 2008

World does not need to choose between food and fuel: ADM, Monsanto

US agribusiness companies led by Archer Daniels Midland Co. (ADM) are hitting back at the rising tide of critics taking aim at ethanol producers.

ADM, the largest ethanol producer, together  with seed makers Monsanto Co. (MON) and DuPont Company. (DD), as well as Deere & Co. (DE), made their call through a new lobbying organization called the Alliance for Abundant Food and Energy led by Mark Kornblau, a Democratic strategist.

The issue has divided the US agribusiness into two camps, with grain and ethanol producers supporting ethanol and traditional corn users such as meat producers opposing them.

Members of the new alliance were of the view that technological improvements would boost crop yields and prevent demand from renewable fuels from crowding out food supplies.

Their opponents meanwhile argue that ethanol production has made feed and therefore food prices higher.

Executives from the four companies and the Renewable Fuel Association, or RFA, will call on lawmakers worldwide "to support agricultural innovation globally".

The lobbying is likely to be opposed by from other US agribusiness sector dependent on corn as a feed stock.

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

The CEO of chicken producer Tyson has called on Congress to remove the ethanol subsidies so as to reduce support for the ethanol industry.