High Food crisis:Biofuel policies partly to blame

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The global food prices have surged from 2007 and 2008 and had as a result led to an increase in the price for commodities such as rice, maize and wheat which are the staples in most developing countries diets. Because of the surge countries like Ethiopia and Somali who are largely depend on international food aid, required more emergency food aid. Soaring corn prices have sparked tortilla riots in Mexico City, Mozambique and many other developing countries. Because of the rising costs for food, the UN’s food program said that it required 500 million dollar in additional funding. I normally send monthly remittance to some family members back home (Somalia) and because of the food crisis I had to double the amount of money I was sending, so I have always wanted to know the core reasons behind this surge.

There are a number of issues related to the cereal prices that are needed to be kept in mind, some of which are cyclical or short term (e.g weather, stocks, export restriction, speculation into agricultural markets) and others that are longer term (e.g emerging economic demand, oil prices, Biofuels). My discussion will however be related to the biofuels,  the fuel versus food.

As oil prices reached its peak and the ranging debates on how to reduce carbon emissions to slow climate change got stronger, many countries are adopting biofuels and considering it to be a renewable and clean source of energy. The increased demand for food crops exceeded the supply due primarily to biofuel policies in industrialised countries and to a lesser extent changing diets in rapidly-growing developing countries. Please take a few moment and look this diagram the food crop’s demand and supply. As the demand for biofuels increases, food production and feed demand also rises with it which leads to more output with higher price.

Well what is biofuel and how is related to this issue? Biofuels are many kinds of fuels which are derived from biomass. Biofuel production has risen last few years. Commodities such as  maize, sugar cane or vegetable oil can be used either as food or biofuels. Some experts argue that the reason why the food prices have risen is because the energy markets are in direct competition with the food markets for scarce arable land. This means that hunger for fuel in rich countries is now competing against hunger for food in poor countries.

In July 2008 working paper was released by the world bank policy research and stated that…large increases in biofuels production in the United States and Europe are the main reason behind the steep rise in global food prices“, However a report published 2010 by the world bank concluded that their prevouse study may have been overestimated the contribution biofuel production as “the effect of biofuels on food prices has not been as large as originally thought, but that the use of commodities by financial investors may have been partly responsible for the 2007/08 spike.”

Report published by the OECD  in July 2008 states that “the impact of current biofuel policies on world crop prices, largely through increased demand for cereals and vegetable oils, is significant but should not be overestimated. Current biofuel support measures alone are estimated to increase average wheat prices by about 5 percent, maize by around 7 percent and vegetable oil by about 19 percent over the next 10 years.

My believe is that the heavily subsidised biofuel industry is fundamentally immoral as it diverts land which should be producing food to fill human stomach and not producing fuel for car engines. After doing some analysis the international food policy institute IFPRI found that biofuels contributed 30% of the food price rice from 2006 to 2007.

Apart from the food crisis, other issues related to biofuel are deforestation, soil erosion and impact on water resources. As Jeff McNeely put it “Biofuels could end up damaging the natural world rather than saving it from global warming”. The question is: is it going to be food for thought or food for fuel.

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One Response to “High Food crisis:Biofuel policies partly to blame”

  1. spessima Says:

    The issue with High Food Prices in the Global South,particularly Sub-Sahara Africa(Sierra Leone a case study )is indeed partly to be blamed on the unending demands placed by the so called Devolped North,that is their galloping demand for biofuels to sustain thier ever growing energy comsumption needs particularly in the manufacturing industries.This to me is the tip of the iceberg.
    Let me take this issue further and to introduce a discourse to this big old problem of increased food prices(in developing countries particularly Africa) and the partial blame directed at Biofuel policies.(set/deviced by who and for who and for how long?).The Rich countries have been pushing for further Trade Liberalization by Developing countries as was evident in the Uruguay Round of GATT(General Agreement on Trade and Tariffs),in the Uruguayan city of del Este in 1994 .This was pursued through the OECD(Organisation for Economic CO-operation and Development)-the club of the affluent countries(in 1998) and then through the World Trade Organisation(in 2003).This proposal referred to as the non-agricultural market access(NAMA) where developed countries have shifted their focus and are now concentrating on a proposal to drastically reduce industrial tariffs in the developing countries by lowering their agricultural tariffs and subsidies,so that poor countries can increase their food production and exports.In return,the developing countries must be friendly towards industrial tariffs..This was sold as a win-win deal,even though unilateral trade liberalisation should be its own reward,according to free trade theory.Many developing countries are in fact net agricultural importers and thus unlikely to benefit from it.They may even get hurt,if they happen to be importers of those agricultral products(eg,rice,wheat) that are heavily subsidizes by the rich countries and a justification for the increase in their prices.The main beneficiaries of the opening up of agricultural markets is the rich nations with strong agriculture.Developed countries do not protect many agricultural products exported by poor countries (e.g.rice,coffee,tea,cocoa) for the simple reason that they do not have any domestic producer to protect..
    Enough said about the role of the big brother.We must also note that Global Population and consumption of energy increased in the 1990s,despite large decline in Eastern Europe and the former Soviet Union.Comsumption of all types of energy increased,with most of the increase in fossil fuel,but faster growth in nuclear energy and renewable energy.Use of biomass in developing countries increased ,although its share decreased slightly.Most countries in Sub-Saharan Africa, and some in Asia and Latin America and the Caribean,depend on traditional biomass for most of their national energy supplies,in some cases up to 90%.Most people in rural Africa(eg ,Mono,my place of birth in southern Sierra Leone)do not have access to ,or cannot afford,fossil fuel or other modern energy supplies.For cooking,heating and other energy needs,over 2.5 billion people in developing countries depend on fuelwood or,when that is unaffordable,on crop residues and animal dung(ESRI,1996).Traditional cookstoves used in pooly ventilated spaces use biomass inefficiently and produce smoke,carbon monoxide,hyrocarbons and other air pollutants that damage the health of others who tend the stove.Are we also not contributing to global warming in search of satisfying our basic needs?The world forest area declined by about 2.4 per cent in the 1990s,a loss of about 90,000km per year(FAO,1980-2000).The deforestation rate is highest in Africa,at over 7 percent per decade.Almost all deforestation is due to the expansion of agriculture and pastures.In developing countries continuing population growth and increasing demand for food,particularly meat,rice and diary products,combined with growth in agricultural acitivities,will increase pressure for deforestation.Due to the increase in demand for food generally (positive correlation between population increse and increase in demand for basic needs(food ,shelter,medicine,education) that outstrip supply ,hence the high food prices.In conclusion the view of the writer is that increased global food prices are as a result of a combination of factors both in the global north(trade liberalization policies which is impacted on agricultural output in the developing countries,including the increased demand for biofuels by the manufacturing industries) and the global south-increased population growth and hence increased demand for basic food,hence high prices as confirmed in this article.I think they both guilty(one, to a lesser degree) of the same crime,causing undue human disater to the climate.

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