Biofuels: a very bad idea


Richard Moore

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    As Biofuels Boom, Will More Go Hungry?
    By Ruth Gidley
    Wednesday 07 March 2007

London - Using plants to feed our fuel needs may be a great idea, and the 
biofuel gold rush could be a money-spinner for several poor countries, but some 
experts warn people may go hungry as food prices rise.

Fans of biofuels give the impression we could soon be running cars on maize, 
producing electricity with sugar, and getting power from palm oil.

Even though the biofuel boom is only just beginning, it has already pushed up 
the cost of staples in places like Mexico where rocketing tortilla prices have 
sparked angry protests.

Some experts foresee a permanent change in food economics if farmers scent 
higher profit in fuel crops than in growing plants to feed people.

"We're into a new structure of markets," said British food aid expert Edward 
Clay. "It could have profound implications on poor people."

World leaders promised in 2000 to halve by 2015 the proportion of people, 
estimated at 1.2 billion or a fifth of humanity in 1990, who live on less than a
dollar a day and who suffer from hunger.

According to the 2006 review of progress towards the goal, an estimated 824 
million people in the developing world were affected by chronic hunger in 2003, 
mostly in sub-Saharan Africa and southern Asia.

Oil prices have roughly tripled since the start of 2002 to above $60 a barrel 
and as oil resources held by Western firms dwindle, biofuels have seemed viable 
and the message about climate change has gone mainstream.

Governments and oil companies are seeking alternative fuel sources and U.S. 
President George W. Bush has made it clear he supports a major shift towards 

Farmers in the United States are raising production of maize, now a lucrative 
material for biofuel production. Soaring U.S. demand for ethanol - produced from
crops like maize and sugar cane - has sent maize prices to their highest level 
in a decade.

Mexicans are feeling the impact. Tens of thousands took to the streets in 
January when the price of tortillas tripled to 15 pesos ($1.36) a kg. There are 
about 35 of the flat maize patties that are Mexico's staple food in a kg.

Since half of Mexico lives on $5 a day or less, that's no small jump, and 
President Felipe Calderon - a conservative who is a firm believer in free 
markets - intervened to cap prices.

    New Economic Era?

Food costs as a proportion of incomes have been on a downward slide since World 
War Two, at least in the West. Clay says one of the big questions now is whether
biofuels could reverse that process and take us into a new economic era which 
might be yet harder on the poor.

Although he says the current spike in prices will be temporary, he is not 
convinced food prices will fall back to pre-biofuel boom levels.

"By next year, (food) prices will begin to fall away," he predicts. "But that 
doesn't mean they'll ever fall to what they were before."

The United States and Brazil, the world's top biofuels producers, are not the 
only countries jumping on the biofuels bandwagon. China has joined them and now 
ranks in the global top four for biofuels output.

The incentive to switch land use from food crops to fuel crops mounts with 
rising biofuel demand, potentially underpinning prices.

Also maintaining upward pressure on food prices are the twin needs of economic 
boomers China and India to be self-sufficient in fuel, but also in food. China's
expanding middle classes want to eat more meat, which requires grain production 
for feed, in turn keeping food prices high.

While food prices are likely to be dampened by farmers increasing food crop 
production in the short term, the scope for switching is limited.

Numerous scientists and economists say China and India do not have enough water 
to increase grain production, whether for animals or fuel.

    Less Food Aid?
    The biofuel boom may also change policies on food aid.

Now U.S. farmers can make good money selling grain to make ethanol, there could 
be a shift in its policy of giving 99 percent of food aid contributions in 
goods, rather than cash.

It might now actually be more convenient for the United States to buy its food 
aid allotment elsewhere, food aid expert Clay says.

The United States is the world's largest food aid donor but has come under heavy
criticism, especially from Europeans, who say aid in kind distorts local 
markets, often takes a long time to arrive and is more expensive to ship than 
buy locally.

Bush has been trying to persuade Congress to change the law to allow up to 25 
percent of the country's food aid in cash, but the bill has been rejected under 
pressure from farmers who did not want to lose what was more or less a subsidy 
for their grains.

Bush's bill is up before Congress again this year. For the last few years, the 
world's annual food aid donations have been around 10 million tonnes, in line 
with an international agreement in place since the 1960s for wealthy countries 
to give at least 5 million tonnes of food annually.

Donations fluctuate depending on prices, and relief organisations are already 
bracing themselves for a likely cut in volumes donated.

Clay says when food prices last rose in 1995, parts of the world where food aid 
was used in development projects - like school feeding programmes - were the 
most vulnerable to cutbacks in the following year.

The same places - Bangladesh, Central America, Eritrea, Ethiopia and North 
Korea, for example - will probably be first to feel the pinch now.

    Additional reporting by Nigel Hunt in London and Alister Doyle in Oslo.

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