Sunday, July 27, 2008

Secret report: biofuel caused food crisis

Aditya Chakrabortty
The Guardian, Friday July 4 2008

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The damning unpublished assessment is based on the most detailed analysis of the crisis so far, carried out by an internationally-respected economist at global financial body.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

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The use of crops to produce Bio-fuels is clearly a factor in soaring global food prices. Although this is the first report (from the World Bank no less) I’ve seen that indicates the significance of the relationship between Bio-fuels and increasing food prices.

Bio-fuels seem to be just another example of Capitalism’s focus on short term profit while ignoring more long term consequences such as sustainability and social costs. The conflict between the use of land resources to grow crops for fuel instead of human consumption was inevitable. Sadly the US and EU support of Bio-fuels for their self interests have impacted food prices and has had a disproportionately negative effect on poor developing nations.


Comments:
See this. It puts more blame on speculation.
 
While speculation is often a destabilizing factor, I have doubts that it is the primary driving force in the rising costs of food. Although I think speculation is a contributing factor. Thanks, I’ll read the article.

The Monthly Review had an excellent article a while back

The World Food Crisis: Sources and Solutions
http://www.monthlyreview.org/080501magdoff.php
 
Just to clarify. I think there a few factors. Greater demand for meat (primarily in China and India) leads to an increase in livestock and therefore increases the demand for grains. Bio-fuels also increase demand and therefore prices (in fact currently 20% of corn in the US goes to the manufacturing of ethanol). This increase in prices attracts investment, especially if the commodity expected (speculation) to continue to increase in price. This can additionally increase demand. So while speculation is a factor it is not the really the cause. The high price of oil also factors in, since petroleum is an important input in the production process.
 
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