Biofuels drive up world food prices
Spurred by hunger and subsequent anger, food riots and protests are breaking out in poor and wealthy countries across the globe.
Wed, May 06, 2009 at 04:17 PM
The skyrocketing cost of food is causing unrest around the world. Last Saturday, Haitians ousted their prime minister, Jacques-Édouard Alexis, following a week of rioting over staple costs. In the Philippines, where the price of rice has doubled since January, the president banned using farmland for any purpose other than food production. Even Italians staged a day-long pasta protest last September when wheat prices jumped.
In the course of a year grain costs have surged by 31% for corn, 74% for rice, 87% for soya, and 130% for wheat, according to the United Nations. Compounding the problem, global grain stores are at a historic low and prices are expected to continue to rise and remain high for the foreseeable future. In response to the growing crisis, the World Food Programme, which feeds some 73 million people, appealed last month for $500 million in funds, the amount it is short this year due to the spike in food prices. And this week, UNESCO released a report that concludes an overhaul of modern agriculture is imminent.
“We estimate that a doubling of food prices over the last three years could potentially push 100 million people in low-income countries deeper into poverty,” World Bank president Robert Zoellick said.
“In this case, the international community has to think about what is the biggest risk in the short run and to make a correct balance between production of biofuel from food stuffs and biofuel coming from nonfood stuffs,” IMF managing director Dominique Strauss-Kahn said during a press conference in DC last Sunday at the spring meetings of the IMF and the World Bank April 12-13.
Scrambling to determine what can be done about the situation and how we got here, experts have begun pointing fingers. The culprits include high oil prices, increasing demand for just about every resource from China and India, and failed crops due to drought. One of the primary perpetrators is biofuels—widely considered one of the few factors we have control over given US and European policy drive the new market.
Last December, biofuels secured their future in the US through the energy bill, which requires the US to use 36 billion gallons of the crop-based fuel by 2022. Congress clamored to support the measure, proposed by President Bush, as a partial remedy to climate change and dependence on foreign oil.
But an increasing number of studies show that America’s thirst for biofuels is a significant contributor to the problem. According to the International Monetary Fund (IMF), the plant-based fuels are responsible for almost half the increase in the demand for food crops.
“I listened to some Ministers during these two days," said Strauss-Kahn, "who are very, very strongly against this kind of thing, talking about crime against humanity using foodstuff to produce biofuels.”
According to Oxfam America’s policy director, Gawain Kripke, “Most economists agree that reducing the conversion of food to fuel would make more food available and that would make prices go down.”
Biofuels are so tied to politics in the US—particularly during a presidential election year when votes in farm states such as Iowa can make or break a campaign—that extracting them from policy seems daunting. For example, in addition to the energy bill, Congress is scheduled to complete debates today on the 2007 Farm Bill, which could include some $2 billion to support biofuels. About half of that would go to developing fuels that aren’t grain-based, like those made from switchgrass.
Supporters of biofuel say these next-generation sources could help meet increasing global demand and reduce pressure on food crops. World Resources Institute economist Elizabeth Marshall says the farm bill research funds are step in the right direction toward encouraging breakthroughs in cellulosic ethanol technology. “The food and land conversion issues have been at a slow simmer for awhile, and biofuels brought them to a boil. They’re exacerbating systemic problems.”
While that may be true, even some members of Congress are beginning to regret their support for biofuels. Massachusetts Congressman Jim McGovern told The New York Times recently that he now thought biofuels were a bad bet: “If there was a secret vote, there is a pretty large number of people who would like to reassess what we are doing.”
Given that food prices will not fall anytime soon, it seems that reassessing biofuels is unavoidable. Kripke says, “This issue is coming out in discussion and there are beginning to be members of Congress, humanitarian organizations like Oxfam, and some industries, like the food industry, which are becoming very concerned about their food prices going up, beginning to call for a revaluation of biofuels. It’s definitely becoming an issue, although it has been slow to come."
Story by Victoria Schlesinger. This article originally appeared in Plenty in April 2008.