A leaked report by the World Bank, purportedly confirms that biofuels, not increased demand from India and China, has caused the world’s food prices to increase by 75%.
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 news also suggests that the report was finished back in April, but was held back:
It all sounds to corny to me, hehehe….
In its annual report, the Red Cross warned of a possible surge in “food-related violence” due to soaring food prices. It suggests that several factors are contributing to the rise is prices:
Drought and climate change have led to a slow down in the growth of agricultural production: in Australia, wheat production plummeted by 52% between 2004 and 2006, and grain production dropped by 13% in the United States and 14% in the European Union in the same period. The use of mainly corn-based biofuels is also contributing significantly to the current shortages. Lastly, changes in eating habits in the West and in the so-called emerging markets primarily in Asia, along with rapid urbanization, have driven up demand for food, putting further strain on supply. Speculation on food commodities is also a major destabilizing factor.
There’s been a warning of food riots every month, from different sources. Sounds like things may destabilize in parts of the world by the end of the year.
As I said back in March, riots over food prices have begun. In fact, this month in Haiti, the prime minister was ousted over food-related rioting and death.
A recent NYTimes Editorial describes the current situation. Although the rise in food prices are partly a result of “uncontrollable forces — including rising energy costs and the growth of the middle class in China and India”, rich nations are making the problem worse by increasing biofuel production:
The International Monetary Fund estimates that corn ethanol production in the United States accounted for at least half the rise in world corn demand in each of the past three years. This elevated corn prices. Feed prices rose. So did prices of other crops — mainly soybeans — as farmers switched their fields to corn, according to the Agriculture Department.
Rice is a staple for half the world. Rice prices have almost doubled this year, mostly due to countries like India and Vietnam banning the export of certain types of rice. India has tried to control domestic costs by raising the export prices of non-basmati rice. In Thailand, there are reports that about 200,000 tons of rice (worth over $100 million) have gone missing from national warehouses. Since January, thousands of troops have been deployed in Pakistan to guard trucks carrying wheat and flour.
In a world where there are millions of people who are wealthy, smart, and creative, we shouldn’t be rioting over food.
As TimesOnline reports, slowly, rioting over food shortages and higher prices has begun.
Population pressure and increased wealth are mainly to blame for the resurgence of food insecurity. More people are eating meat and dairy products in Asia, which increases the demand on the animal-feed industry.
They also talk about how biofuels is threatening world food production.
And in The Star:
Arable-land acreage is indeed shrinking, even factoring out its conversion to production of fuel feedstock. Several million hectares of farmland disappear each year, as growing economies convert it into residential subdivisions and industrial parks. Declining fresh-water supplies further diminish the amount of land available for farming.
Another article which explains why food prices are going up. From the Christian Science Monitor:
Two major trends have been pushing prices up faster than they have risen for more than 30 years. One is that increasingly prosperous consumers in India and China are not only eating more food but eating more meat. Animals have to be fed (grains, usually) before they are butchered. The other is that more and more crops – from corn to palm nuts – are being used to make biofuels instead of feeding people.
Iowa Corn Promotion Board and the Iowa Corn Growers Association are apparently going to launch a consumer-education campaign that says that they are not responsible for food prices going up.
I would partly agree, in that they are not entirely responsible. Of course oil prices, labor costs, transportation costs, etc share some of the blame. But the article ends by advocating the supposedly low extra cost of corn in order to reduce our dependance on foreign oil. [Gee thanks!! So what kind of gas guzzling truck do you drive? ] As more and more farmers switch to growing corn for biofuel rather than food production, food prices have to go up.
Ethanol producers in this country receive a tax credit of 51 cents a gallon, on top of billions of dollars in direct corn subsidies. (In 2005, the most recent year for which figures are available, it was $9 billion.) In Europe biodiesel subsidies can approach $2 a gallon.
Where does the feed for chicken, pigs, and cattle come from? If farmers can get more money for sending the corn to ethanol distilleries rather than food production facilities, the economics of supply and demand would dictate that food prices would go up. Corn is used everywhere. Less corn for everyday staples, means higher costs for everyday staples.
And as the National Corn Growers Association themselves say, “Ethanol production makes huge amounts of the nation’s corn disappear”.