Diversion of food item for fuel, Inflation hurting poor: FM

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Singapore, Mar 26 (UNI) Developed economies like the US are turning food into biofuels at a time when the majority of the world's poor are getting hit by the current surge in oil and food prices, Finance Minister P Chidambaram today said.

''While rising demand is one of the reasons for high food prices, the diversion of food items to produce bio fuels is another reason.

It has been estimated that nearly 20 per cent of corn grown in the United States is diverted for producing bio fuels,'' Mr Chidambaram said while speaking at a lecture at the Lee Kuan Yew School of Public Policy here.

It is a sign of the lopsided priorities of certain countries that they will resort to measures that will produce fuel at a cheaper cost in order to meet the transport requirements of a section of their population even while a larger proportion of the world's population is deprived of food at reasonable prices or, as in the case of some countries, deprived of food altogether, he added.

Corn, soybeans, sugar cane and other crops are used as a source of clean and cheap biofuel.

''The price of crude oil and metals have almost tripled while for maize, rice and wheat, all staple items of food, it has doubled or tripled between 2004 and 2008, which puts countries like ours under huge burden'' Mr Chidambaram pointed out.

The Finance Minister added that the rise in the price of crude oil is another example of greed overtaking the common good of the world.

''What is the justification to price crude oil at 110 dollar a barrel? Oil producing countries have struck a gold mine. Demand is very high and they think that this is a great time to reap in the profits, which is hurting the world economy,'' Mr Chidambaram said.

The same could be said of food prices. While there is indeed some supply-demand mismatch, there is no case for raising the prices so high that many poor people cannot afford to buy food anymore, he added.

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