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ROLE OF BIOFUELS DOWNPLAYED

White House & USDA say minimal effect on food price increases

  The White House and USDA are battling in the media to show competition between biofuels and food production for corn and soybeans - and the resulting price spikes - have only minimal impact on food prices.  The chairman of the Council of Economic Advisors told a Senate hearing that corn-based ethanol production accounted for only 7.5% of the 37% runup in U.S. corn prices over the last year; globally, the contribution was about 13%.  USDA made similar statements, with Agriculture Secretary Ed Schafer contending "diversity" in fuels is critical to national security, and while acknowledging biofuels contribute to higher commodity prices, he said these increases pass through to retail prices at a lower rate, blaming processing and marketing cost increases for the majority of food price runups. Meanwhile, the White House announced it would cease putting oil into the Strategic Petroleum Reserve (SPR), the announcement coming on the heels of legislation sent to the President to do just that for the remainder of 2008.

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