The dark side of biofuel production

from The Taipei Times

By John Vidal

Two years ago the UN’s Food and Agriculture Organization (FAO) expected biofuels to help eradicate hunger and poverty for up to 2 billion people. On Friday, UN Secretary-General Ban Ki- moon raised real doubt over that policy amid signs that the world was facing its worst food crisis in a generation.

Since the FAO’s report in April 2006 tens of thousands of farmers have switched from food to fuel production to reduce US dependence on foreign oil. Spurred by generous subsidies and an EU commitment to increase the use of biofuels to counter climate change, at least 8 million hectares of maize, wheat, soya and other crops which once provided animal feed and food have been taken out of production in the US.

In addition, large areas of Brazil, Argentina, Canada and eastern Europe are diverting sugar cane, palm oil and soybean crops to biofuels. The result, exacerbated by energy price rises, speculation and shortages because of severe weather, has been big increases of all global food commodity prices.

Lester Brown, director of the Earth Policy Institute in Washington, said on Friday that land turned to biofuels in the US alone in the last two years would have fed nearly 250 million people with average grain needs.

“This year 18 percent of all US grain production will go to biofuels. In the last two years the US has diverted 60 million tonnes of food to fuel. On the heels of seven years of consumption of world grains exceeding supply, this has put a great strain on the world’s grain supplies,” he said.

World Bank President Robert Zoellick said last week that prices of all staple food had risen 80 percent in three years, and that 33 countries faced unrest because of the price rises. Zoellick urged rich countries to give the UN’s World Food program US$500 million for emergency aid. The bank plans to increase lending for agricultural production in Africa from US$420 million to US$850 million a year next year.

As the bank predicted rice price rises of 55 percent this year, violent protests against the cost of living hit Ivory Coast this week. On Thursday Ivory Coast President Laurent Gbagbo canceled custom duties on imported staple foods and cut taxes on rice, sugar, milk, fish, flour and oils.

In Bangladesh, where families spend up to 70 percent of income on food, more than 50,000 households are getting emergency food after rice price rises.

A government source said: “One reason is that the overall drop in food production because of biofuels has prevented food being exported.”

Many countries that switched from traditional crops to rice diets as urbanization increased face serious shortages and have defied the IMF by increasing wages, lowering prices and banning exports. China has put price controls on cooking oil, grain, meat, milk and eggs.

There have been protests in Guinea, Egypt, Morocco, Uzbekistan, Yemen, Burkina Faso, Mauritania, Niger, Uzbekistan, Senegal, Haiti, Bolivia and Indonesia. In the last two months Vietnam, Cambodia, Egypt, India, the Philippines and Thailand have stopped crop exports or raised prices to more than US$1,200 a tonne to discourage exports. On Friday, Philippine leaders warned that people hoarding rice could face economic sabotage charges. A moratorium is being considered on converting agricultural land for building housing or golf courses. Fast-food outlets are being pressed to offer half- portions of rice.

Robert Zeigler, director-general of the International Rice Research Institute, said it could be months before the market got a clear sense of how high prices could go.
“The whole market could become paralyzed. Who’s going to sell rice at US$750 a tonne when they think it’s going to hit US$1,000?” he said.

Josette Sheeran, director of the World Food Program, said in Ethiopia last week: “The cost of our food has doubled in just the last nine months. We are seeing more urban hunger than ever before. Often we are seeing food on the shelves but people being unable to afford it.”

Urbanization and world trade rules have encouraged the dumping of rice and other food on African countries, which now import up to 40 percent of food.

Last month the UK’s chief scientist and food expert, John Beddington, said the prospect of food shortages over the next 20 years was so acute that politicians, scientists and farmers must tackle it immediately.

“Climate change is a real issue and is rightly being dealt with by major global investment. However, I am concerned there is another major issue along a similar time-scale, an elephant in the room — that of food and energy security.”