A group of U.S. agribusiness companies led by Archer Daniels Midland Co. (ADM) launched a new front in the intensifying food-versus- fuel debate Thursday, maintaining that technology can ease global supply shortages.
ADM, backed by seed makers Monsanto Co. (MON) and DuPont Co. (DD), as well as Deere & Co. (DE), made their call through a new lobbying organization called the Alliance for Abundant Food and Energy.
The move highlights a sharp divide in the U.S. agribusiness sector over food and energy policy, notably subsidies for ethanol and other renewable fuels.
Members of the new alliance have long argued that technological improvements would boost crop yields and prevent demand from renewable fuels from crowding out food supplies.
This view is fiercely opposed by food companies such as Tyson Foods Inc. (TSN) , which has called for U.S. ethanol subsidies to be dropped as its profits have been eroded by higher feed costs for its poultry, pork and beef processing business
The alliance is led by Mark Kornblau, a Democratic strategist, and its launch in a general-election year coincides with a period of sharply rising food inflation, as well as soaring gas prices.
Executives from the four companies and the Renewable Fuel Association, or RFA, will call on lawmakers worldwide "to support agricultural innovation globally".
"While others are asking should it be food 'or' feed 'or' fuel, we believe the answer is 'and'," said Monsanto Chief Executive Officer Hugh Grant on the company's earnings call last month.
The lobbying is expected to trigger staunch opposition from other executives in the U.S. agribusiness sector who have called for reform of renewable fuel policy.
Tyson Chief Executive Dick Bond attributes rising food inflation in the U.S. to competition for corn from ethanol producers, as well as the rising global demand for protein that pushed corn and soybean prices to record levels in recent weeks.
Bond has called on Congress to reduce or drop a federal tax subsidy and end import tariffs on sugar-based ethanol.
"Diverting corn to make ethanol doesn't make sense," said Bond in April. Tyson declined to comment ahead of the alliance launch at a press conference in Washington.
Current U.S. renewable fuel policy includes a 51-cent-a-gallon subsidy on corn-produced ethanol and a tariff on imports, mainly sugar-based ethanol from Brazil.
Bond wants both of these removed, a call that makes his stance more strident than others in the sector, such as Cargill's CEO, Greg Page, who has made repeated calls for a greater level of national debate on the food-versus-fuel issue.
Cargill and Bunge Ltd. (BG), another agribusiness group vocal in the debate, are not members of the alliance.
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