Biofuel policy causing starvation: Nestle boss

Soaring food inflation is the result of "immoral" policies in the United States which divert crops for use in the production of biofuels instead of food, according to the chairman of one of the world's largest food companies.

Peter Brabeck-Letmathe, the chairman of Nestle, lashed out at the Obama Administration for promoting the use of ethanol made from corn, at the expense of hundreds of millions of people struggling to afford everyday basics made from the crop.

Brabeck-Letmathe weighed in to the acrimonious debate over food price inflation to condemn politicians around the world who seem determined to blame financial speculators instead of tackling underlying imbalances in supply and demand.

"Today, 35 per cent of US corn goes into biofuel," the Nestle chairman told the Council on Foreign Relations in New York yesterday.

"From an environmental point of view this is a nonsense, but more so when we are running out of food in the rest of the world.

"It is absolutely immoral to push hundreds of millions of people into hunger and into extreme poverty because of such a policy, so I think - I insist - no food for fuel."

Corn prices almost doubled in the year to February, though they have fallen from their peak in the past few weeks. Anger at rising food prices contributed to protests across the Middle East, and rising commodities costs were among the factors pushing British inflation to 4.4 per cent in February, figures yesterday showed.

US exports account for about 60 per cent of the world's corn supply.

Demand has surged as more people join the middle classes in emerging economies such as China and India, not just because these new consumers demand more food made from corn, but also because demand for meat has increased and livestock farmers need to buy more feed.

Nestle, the company behind Shredded Wheat, Nescafe and Aero chocolate bars, has been lobbying European regulators and governments around the world against setting high targets for biofuel use, even though many countries see the production of ethanol as a means of meeting obligations to cut carbon fuel emissions.

The lobbying has fallen on deaf ears in the US, however. Ethanol production from corn is heavily subsidised, with output running at more than 13.5 billion gallons annually.

Policies to promote its production were "absurd", Brabeck-Letmathe claimed yesterday, and meeting a mooted global target of having 20 per cent of fuel demand with biofuels would involve increasing production by one-third.

"What is the result? Prices are going up. It's not very complicated."

Brabeck-Letmathe has suggested alternative sources for biofuels could be algae and stems of harvested corn.

- Independent