Biofuels Causing Food Price Rises?

by Mary

While the industrialized world worries about the increase in oil prices, the third world is struggling with the huge price increases in basic food stocks. In both the US and Europe, lots of agricultural land and resources have been set aside for growing biofuels. How much of this redirection of these resources is related to the increased prices experienced in the third world? According to a confidential World Bank document, 75% of the price increases can be laid at the feet of the surge in using land for biofuels.

As the UK Guardian reports:

Biofuels have forced global food prices up by 75% - far more than previously estimated - according to a confidential World Bank report obtained by the Guardian.

The damning unpublished assessment is based on the most detailed analysis of the crisis so far, carried out by an internationally-respected economist at global financial body.

The figure emphatically contradicts the US government's claims that plant-derived fuels contribute less than 3% to food-price rises. It will add to pressure on governments in Washington and across Europe, which have turned to plant-derived fuels to reduce emissions of greenhouse gases and reduce their dependence on imported oil.

So why hasn't the report been published?

Most likely because the World Bank is worried about getting on the wrong side of Bush. Yet, because of the mandated use of biofuels in our gasoline, some 100 million people in the world have been pushed into poverty. How effective is that solution when it causes others in the world to starve?

"Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate," says the report. The basket of food prices examined in the study rose by 140% between 2002 and this February. The report estimates that higher energy and fertiliser prices accounted for an increase of only 15%, while biofuels have been responsible for a 75% jump over that period.

It argues that production of biofuels has distorted food markets in three main ways. First, it has diverted grain away from food for fuel, with over a third of US corn now used to produce ethanol and about half of vegetable oils in the EU going towards the production of biodiesel. Second, farmers have been encouraged to set land aside for biofuel production. Third, it has sparked financial speculation in grains, driving prices up higher.

It is clear we need to reconsider our use of biofuels now and find ways to use fuel, our lands, and potable water more wisely and in a way that respects the limits of our world and the need to consider the effect of our actions on others in the world.