Food Prices Up 75% Due to Biofuel production

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An unpublished and supposedly confidential World Bank report states that biofuels have forced global food prices up by 75% which is far more than previously estimated.

The assessment relies on an analysis of the global food crisis that was conducted by an internationally-respected economist at global financial body.

This information stands in contradiction to the claims by the US government's claims that plant-derived fuels contribute less than 3% to food-price rises. This report will add fuel to the forces who are already opposed to using plant-derived fuels to reduce emissions of greenhouse gases and reduce their dependence on imported oil.

The report was in April and may have not been published to avoid embarrassing President George Bush.

There is a G8 meeting in Hokkaido, Japan, next week and the food crisis is on the agenda; the lobby for a moratorium on the use of plant-derived fuels will have this report to strengthen their position.

"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."

Approximately 100m people worldwide have been pushed below the poverty line, due to rising food prices, estimates the World Bank, and have increased prices 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."
The successive droughts in Australia have had a marginal impact; rather the EU and US drive for biofuels has had by far the biggest impact on food supply and prices.

"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 that were examined in the study rose by 140% between 2002 and this February. Higher energy and fertilizer prices accounted for an increase of only 15%, while biofuels have been responsible for a 75% jump over that period.

Biofuel production has distorted food markets in three main ways. One, 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. Two, farmers have been encouraged to set land aside for biofuel production and three, has sparked financial speculation in grains, driving prices up higher.

"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 subsidizing higher food prices, while doing nothing to tackle climate change."