World Bank and UK Gov’t reports agree: biofuel rush caused food shortage

UPDATE : The UK RFA Review of the Indirect Effects of Biofuels (aka the “Gallagher Report”) has been posted online here (on 7/7/08). The UK government says it will slow down the expansion of biofuel usage for transportation in keeping with the recommendations of the report.


The recent worldwide spike in food prices, concomitant with the development of biofuel, has caused speculation that agriculture resources are being diverted into the energy sector and away from the production of cheap food.

The relationship between an expanding energy demand for agricultural products and a rise in food prices may seem straightforward, but is complicated by all sorts of factors. The rising fuel prices will increase the cost of bringing food to market. At the same time, the expansion of farmland to meet the rise in demand will tend to increase supply of agricultural products.

The issue has been percolating for a while, but will appear more prominently now that reports are being respectively released and leaked by the UK and the Word Bank. The reports apparently agree that the recent food price crisis is largely a result of biofuel production altering the agriculture market.

The findings will undermine the defenders of biodesel producing industrializing countries who have been countering environmental objections to biofuels with economic arguments. Brazilian President Luis da Silva spoke defensively at the U.N. last year about the production of biofuels. Brazil frames the growth of sugarcane for biodiesel as necessary to sustainable economic development. This was the cause of a public spat between Cuba and Brazil last year, when Fidel Castro wrote about the conversion of farmland to biofuel production. Castro made some waves on the Left at the time, and Lula was obliged to respond dismissively. It now appears that Castro anticipated the findings of the World Bank, in part. The reports directly contradict the recent assertions of da Silva that food prices have “no relation with biofuels.”

The United States government signed a biofuel agreement with Brazil in March of 2007 and has recently concluded a similar agreement with Colombia. Colombia, has been in a civil war for 60 years. Right now, the Bogota government is gaining ground from the FARC. At the same time, the intensive large scale agriculture necessary to produce biofuels is expanding into areas conquered by the government, displacing the smaller coca farms.

There has been a lot of concern on the Left about the power politics behind these biofuel agreements. For example, see this March 2008 Mike Davis interview. Now these new mainstream reports may validate the anti-imperialist argument. It isn’t clear from the press leaks so far, how either report addresses the environmental concerns of converting wilderness to biofuel agribusiness production.

The World Bank report does reach three conclusions on how biofuels have driven up the cost of food (from the Guardian):

  1. 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.
  2. Farmers have been encouraged to set land aside for biofuel production.
  3. It has sparked financial speculation in grains, driving prices up higher.
  • The web page for the UK report is here: RFA Review of the Indirect Effects of Biofuels. The full report should be posted soon. As of Friday, July 4, 2008, the page has various preliminary findings of the report committee, the methodology used, etc.
  • The World Bank report is apparently not available on the web yet. Most websearches on the topic simply reference the Guardian report as of July 4, 2008.

Posted on July 4, 2008, in Analysis, News and tagged , , , , , , , , , , , , , . Bookmark the permalink. Leave a comment.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: