July 4, 2008

A leaked report, published in today's Guardian (4th July), claims that biofuels have contributed to the rise in global food prices to a much greater level than previously thought.

The unpublished World Bank report puts the increase in food prices that can be attributed to growing biofuels at a staggering 75%. The assessment is based on the most detailed analysis yet undertaken of the food crisis and the fact that it's been carried out by an internationally-respected economist at a global financial body adds considerable weight to it's findings. 

The figure rubbishes the US government's claims that plant-derived fuels contribute less than 3% to food-price rises.  It's thought that the report, completed in April, has been suppressed to avoid embarrassing President Bush (if that is possible!). 

As well as being Independence day today, the report has surfaced the week before Leaders of the G8 industrialised countries meet in Japan to discuss, among other things, biofuels policy.  The meeting, in Hokkaido, will see campaigners lobbying for a moratorium on the use of plant derived fuels. 

The Gallagher report, the UK government's own report on the impact of biofuels, was due to be published last week, although at this point it's findings have yet to be 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 dubbed higher food and fuel prices "the first real economic crisis of globalisation".

President Bush has squared the blame for food price rises on increased demand from the emerging Chinese and Indian economies, but the report 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."

Since April, all petrol and diesel in Britain has had to include 2.5% from biofuels. This is due to rise to 5% in 2010, although in the light of the new findings we have to hope that the government will reconsider.  In addition to this the EU has been considering raising that target to 10% by 2020, but being faced with mounting evidence that this will only push food prices higher, surely this will now be re-evaluated.

The report identifies three main ways that biofuels have distorted food markets.  Firstly, it has changed what grain is being used for, from food to fuel.  More than a third of US corn and half of EU vegetable oils are now dedicated to the production of biodiesel.  The second factor is the amount of land set aside, by farmers, for biofuel production.  Government subsidies and grants have made it a profitable area of farm production.  And thirdly, speculation on commodities markets has also pushed prices higher as brokers bet on reduced yields.

"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.

Previous assessments of the food crisis have looked at it over a much longer period and have not linked these three factors.  The reports author, Don Mitchell, is a senior economist at the World Bank and has done a detailed, month-by-month analysis of the surge in food prices.  This has allowed him to examine the factors affecting food prices at a much more granular level, observing trends and changes on an hourly and daily basis.  This detailed examination has led to his damning conclusion.

Biofuels were viewed by many as a kind of get out of jail free card for the motoring industry, allowing people to run their cars without the same damaging impact on the environment.  But as food prices skyrocket and push millions into food poverty and starvation biofuels are falling out of favour.  The Government's former chief scientific officer Dr David King, said last night "It is clear that some biofuels have huge impacts on food prices, all we are doing by supporting these is subsidising higher food prices, while doing nothing to tackle climate change."

Your Driving first reported the impact of biofuels on climate change in April when the Renewable Fuels Transport Organisation's obligation to use biofuels wasintroduced.  As the report was finished in April, coinciding with the RTFO obligation came in, surely there should be an investigation as to how it's taken until now to come to light.

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