Bush Economist: High Food Prices Here To Stay
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WASHINGTON — High prices for American food are likely here to stay, but the worrisome rate of inflation is expected to level off over the next few years, a top Department of Agriculture economist told lawmakers yesterday.
“My own view is this will moderate,” the agency’s chief economist, Joseph Glauber, said at a hearing called by Senator Schumer to examine the rising cost of food.
Mr. Glauber urged increasingly anxious lawmakers against taking drastic policy steps to respond to the domestic impact of the worldwide food crisis, and said a return to normal weather patterns in Australia and other grain-producing countries would gradually stabilize a volatile market.
His testimony came as Congress is voicing concern over prices for household staples like bread, flour, and eggs, which are now rising at rates not seen in decades.
“From aisle to aisle, shelf to shelf, including everything from staples to special treats, the prices families are paying to fill their shopping carts go up and up and up,” said Mr. Schumer, chairman of the Joint Economic Committee. He said consumer anxiety over food prices would soon “equal or even surpass” the frustration over soaring gas prices.
Skyrocketing prices and food shortages have sparked riots in some countries in recent months, and lawmakers noted that even in America, Costco and Sam’s Club have begun limiting the amount of rice customers can buy, a development first reported last month by The New York Sun.
President Bush yesterday announced that he would seek an additional $770 million from Congress for food aid, which comes in addition to $200 million that the administration said it would allocate last month. He also said he would urge countries to lift agricultural export limits as a way to ease price pressures.
Domestically, the cost of food rose 4% in 2007, which marked the highest inflation rate since 1990, according to the Consumer Price Index. The Department of Agriculture projects prices to increase between 4% and 5% this year, Mr. Glauber said.
Lawmakers and panelists pinned the blame for rising food prices on a range of factors, including crop failures due to drought, the surge in oil prices, a weak dollar, the increased demand for biofuels, and speculation on commodity futures. There was little consensus, however, on what, if anything, could be done to ease the burden for families in the short term.
A Long Island bakery owner, Richard Reinwald, who is vice president of the Retail Bakers of America, urged Congress to reconsider subsidies for ethanol production, which helps to drive up food prices by taking up crop acreage devoted to wheat and reducing the use of corn for food instead of fuel.
But a number of lawmakers from both sides of the aisle warned against blaming the prices solely on ethanol. The issue has divided officials along geographic rather than ideological lines, with lawmakers from farm states speaking out in defense of their hometown industry.
“I’m very concerned if we just pull the rug out of an infant industry,” Senator Klobuchar, a Democrat of Minnesota, said.
Lawmakers will examine ethanol policy again next week when Senator Lieberman convenes a hearing before the Homeland Security Committee on the effect of biofuel production on food prices.
The president of the National Farmers Union, Tom Buis, testified yesterday in support of ethanol subsidies and said the “real culprit” was the skyrocketing price of oil, which had driven up the cost of production and transportation for farmers.
Mr. Buis and a representative of America’s Second Harvest, a hunger relief organization, pushed for the passage of the farm bill, which includes billions of dollars in funding for nutrition programs and for food stamps and other aid to the poor.
The senior vice president of Second Harvest, George Braley, said the combination of rising food prices, reduced corporate and federal donations, and an increase in people seeking aid had created a “true crisis” for the agency. “Quite simply, Mr. Chairman, our network is overwhelmed,” Mr. Braley told Mr. Schumer.
The New York senator described feeling the effects of higher prices firsthand. He held up a loaf of bread that he and his wife bought at their neighborhood Fairway in Brooklyn for $4. The same bread cost $3 a few years ago, he said.
Yet Mr. Schumer stopped short of endorsing any specific remedies, although he previously has called for lifting the tariff on imported ethanol. Instead, he offered one of his trademark puns before departing the hearing room. “It’s going to cause a lot of food for thought,” he said with a grin.