Corn Prices Rise Worldwide Due to U.S. Ethanol Policy

The new director general of the United Nation's Food and Agriculture Organization says that cereals should not be used for biofuels.

January 24, 2012

NEW YORK - According to the United Nations?? Food and Agriculture Organization (FAO), U.S. ethanol use is increasing the cost of grain prices worldwide, Bloomberg reports.

"FAO has been raising its voice against using food to produce bio energy," said Jose Graziano da Silva, director general of FAO. That??s "especially" the case for corn in the U.S. and oilseeds in Europe, he said.

Corn futures closed at $6.115 a bushel last week, nearly triple the $2.1175 a bushel sold for a decade ago. Part of the U.S. corn production is used to produce ethanol, while rapeseed is used in Europe to make biodiesel.

"We have been looking into the details of the price, and nowadays there is no doubt that the use of maize in the U.S. for biofuels affects the prices of maize all over the world," Graziano da Silva said.

Da Silva characterized biofuels as a "promise," explaining that technological improvements are required to "completely change" that.

"The position we have right now in FAO is that cereals should not be used for biofuels production," he said.

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