[Sustain] Hidden World Bank Report: Biofuels Cause 75% Rise In Food Prices

[Eric Brooks]

http://www.guardian.co.uk/environment/2008/jul/03/biofuels.renewableenergy


  Secret report: biofuel caused food crisis

Internal World Bank study delivers blow to plant energy drive

Aditya Chakrabortty
The Guardian (UK)
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The damning unpublished assessment is based on the most detailed 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.

Senior development sources believe the report, completed in April, has 
not been published to avoid embarrassing President George Bush.

"It would put the World Bank in a political hot-spot with the White 
House," said one yesterday.

The news comes at a critical point in the world's negotiations on 
biofuels policy. Leaders of the G8 industrialised countries meet next 
week in Hokkaido, Japan, where they will discuss the food crisis and 
come under intense lobbying from campaigners calling for a moratorium on 
the use of plant-derived fuels.

It will also put pressure on the British government, which is due to 
release its own report on the impact of biofuels, the Gallagher Report. 
The Guardian has previously reported that the British study will state 
that plant fuels have played a "significant" part in pushing up food 
prices 
<http://www.guardian.co.uk/environment/2008/jun/19/climatechange.biofuels> 
to record levels. Although it was expected last week, the report has 
still not been released.

"Political leaders seem intent on suppressing and ignoring the strong 
evidence that biofuels are a major factor in recent food price rises," 
said Robert Bailey, policy adviser at Oxfam. "It is imperative that we 
have the full picture. While politicians concentrate on keeping industry 
lobbies happy, people in poor countries cannot afford enough to eat."

Rising food prices have pushed 100m people worldwide below the poverty 
line, estimates the World Bank, and have sparked riots from Bangladesh 
to Egypt. Government ministers here have described higher food and fuel 
prices as "the first real economic crisis of globalisation".

President Bush has linked higher food prices to higher demand from India 
and China, but the leaked World Bank study disputes that: "Rapid income 
growth in developing countries has not led to large increases in global 
grain consumption and was not a major factor responsible for the large 
price increases."

Even successive droughts in Australia, calculates the report, have had a 
marginal impact. Instead, it argues that the EU and US drive for 
biofuels has had by far the biggest impact on food supply and prices.

Since April, all petrol and diesel in Britain has had to include 2.5% 
from biofuels. The EU has been considering raising that target to 10% by 
2020, but is faced with mounting evidence that that will only push food 
prices higher.

"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.

Other reviews of the food crisis looked at it over a much longer period, 
or have not linked these three factors, and so arrived at smaller 
estimates of the impact from biofuels. But the report author, Don 
Mitchell, is a senior economist at the Bank and has done a detailed, 
month-by-month analysis of the surge in food prices, which allows much 
closer examination of the link between biofuels and food supply.

The report points out biofuels derived from sugarcane, which Brazil 
specializes in, have not had such a dramatic impact.

Supporters of biofuels argue that they are a greener alternative to 
relying on oil and other fossil fuels, but even that claim has been 
disputed by some experts, who argue that it does not apply to US 
production of ethanol from plants.

"It is clear that some biofuels have huge impacts on food prices," said 
Dr David King, the government's former chief scientific adviser, last 
night. "All we are doing by supporting these is subsidising higher food 
prices, while doing nothing to tackle climate change."

###

-- 
"I am not a liberator. Liberators do not exist. The people liberate themselves." -- Che Guevara

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