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The Senate Foreign Relations Committee held a hearing on “Responding to the Global Food Crisis,” focusing in particular on U.S. agricultural investment in foreign nations and how the development of corn-based ethanol and other biofuels have contributed to the rise in food prices.

Edward Lazear, chairman for the Council of Economic Advisors, said that global food inflation was 43 percent during the 12 months ending in March 2008. He emphasized that Americans spend less than 14 percent of total expenditures on food, while Africans spend about 43 percent and for the poorest populations in Sub-Saharan Africa subsisting on less than one dollar per day, this figure may be as high as 70 percent.

Lazear testified that wheat prices have increased 123 percent, soybeans 66 percent, corn 37 percent, and rice 36 percent. Emerging market consumption, he said, has increased by 45 percent from 2001 to 2007 compared to 1991 to 2000, and that this increase in demand accounts for about 18 percent of the rise in food prices. Other factors, he said, are adverse weather conditions that destroy crops and to a smaller degree, ethanol production. He said that the world’s ethanol production accounts for approximately 13 percent of this year’s 37 percent increase in corn prices, and since corn makes up a small fraction of the International Monetary Fund’s Global Food Index, it is responsible for only about 1.2 percent of the year’s 43 percent total global food price increase.

U.S. Agency for International Development Administrator Henrietta Fore testified that the world’s one billion poorest people are living on one U.S. dollar per day, and that while Africa and Asia suffer most from this kind of poverty, Haiti is also facing a crisis. She also said that three-quarters of the world’s poorest people living on less than 50 cents per day are located in Africa. She advocated changing trade policies that present barriers to food supply and said that U.S. agricultural investment would be “enormously positive.” She mentioned that “even short term hunger” can “unalterably” affect a child through increased risk for disease, cognitive and developmental malfunction, and early death.

Sen. Richard Lugar (R-IN) said that people in nearly 40 countries face food shortages and potential civil unrest as a result. In 1980, he said, agricultural projects accounted for 30 percent of World Bank spending, whereas in 2007 that number was less than 13 percent. Along with Chairman Joe Biden (D-DE), he called for a “second Green Revolution” to increase agricultural research, development, and investment in order to augment yield per acre of crops by improving techniques. He said such an initiative would “benefit developed and developing countries alike,” as would removing trade barriers and tariffs. He also said that ethanol research cannot be curtailed because of its contribution to food price increases because it would put additional pressure on oil prices, which he emphasized is already at $120 per barrel.