Schumer Sets a Hearing on the Global Food Crisis

WASHINGTON — Amid what many are calling a global food crisis, Senator Schumer will convene a hearing tomorrow to examine the impact of rising prices in America, as families and business owners across the country are seeing costs spike at the grocery store even as they rise at the gas pump.

The hearing of the Joint Economic Committee, which Mr. Schumer heads, will be the first to examine the domestic effects of food shortages. It comes on the heels of an announcement yesterday by the U.N. secretary-general, Ban Ki-moon, of a task force aimed at averting "social unrest at an unprecedented scale" due to a food crisis. Soaring food prices have already sparked riots in some countries.

Mr. Schumer's panel will hear from the Department of Agriculture's chief economist as well as a major hunger relief organization and the National Farmers Union.

In America, prices for goods such as bread, flour, and eggs have risen for months, prompting outcries from consumers already worried about a slowing economy. The financial pain has increasingly reached New York residents, local lawmakers say.

"In our area, people are paying $4 for a gallon of milk and $4 for a gallon of gas," the committee's vice chairwoman, Rep. Carolyn Maloney, who represents the East Side of Manhattan and part of Queens, said. "It's really hitting home."

At a White House press conference yesterday, President Bush said administration officials are "deeply concerned about food prices here at home."

Officials attribute the spike to a variety of factors, from weather that has wiped out crops to increased demand for food and energy from China and India. Rising oil and gas prices have made production and delivery more expensive.

The push for corn-based ethanol as an alternative fuel source has also sent corn prices higher, some officials say. That has caused a ripple effect across the food economy, with the greater demand for corn reducing farm acreage devoted to wheat and the increased price leading to higher production costs for meat, eggs, and milk, as corn is the primary source of feed for cattle.

A study commissioned by the Grocery Manufacturers Association in December found the rate of food price inflation in 2007 was one not seen in nearly 30 years, and predicted that the average rate for the next five years would be 7.5%, or triple the average inflation level between 2002 and 2006.

Richard Reinwald has felt the impact firsthand. The owner of Reinwald's Bakery in Long Island, he reported a 66% spike in the price of a bag of flour within two months earlier this year, to about $50 from $30.

"It wasn't just a modest rise. It was an explosive rise," he said.

Over the last year, Mr. Reinwald said, the price of eggs and soybean oil have nearly doubled. While he said he has tried to increase sales to recoup the costs, he has been forced to raise prices. A loaf of rye bread that cost $2.50 a year ago now goes for $3.45, a jump of 38%.

Mr. Reinwald, who serves as vice president of the Retail Bakers Association, has organized a letter-writing campaign of late to pressure lawmakers to oppose ethanol subsidies that lead to lower production of wheat and higher prices.

The effort yielded results when Mr. Schumer's office contacted him recently to testify before the Joint Economic Committee tomorrow.

Ethanol policy has been increasingly targeted as prices have risen, and it threatens to pit the push for cleaner energy against the call for lower-cost food.

In New York, the debate takes on a new twist, as the issue has split the two senators.

Mr. Schumer introduced a bill in January to temporarily lift the tariff on foreign ethanol to free up American corn for the food supply. Senator Clinton, however, campaigned aggressively in support of American-produced ethanol in Iowa, where the industry is sacrosanct.

When Mr. Reinwald sought support from Mrs. Clinton's office for altering ethanol policy, he said the response was: "Sorry, tough luck."

He has received more backing from his local congressman, Rep. Steve Israel, who said he supports a gradual reduction in the 54% tariff on imported ethanol. "It would not take all the pressure off, but it certainly would reduce prices," the congressman said.

The Bush administration and some interest groups, including the National Farmers Union, have said laying the blame for rising food prices on the corn market and the production of ethanol is a mistake. The president's Council of Economic Advisers says increased corn prices account for only one-fifth of the overall rise in domestic food price, and the Department of Agriculture notes that less than one-fourth of the American corn crop is used for biofuels such as ethanol.

The secretary of state, Condoleezza Rice, acknowledged on Monday that "there apparently has been some effect, unintended consequences from the alternatives fuels effort" on worldwide food prices, but she said "it is not a large part of the problem."

Asked about ethanol's effect on food prices, the president yesterday defended subsidized production as a key to encouraging energy independence. "The high price of gasoline is going to spur more investment in ethanol as an alternative to gasoline," he said. "And the truth of the matter is it's in our national interests that our farmers grow energy, as opposed to us purchasing energy from parts of the world that are unstable or may not like us."