Open Forum

New Delhi, 21 June 2008

Biofuels & High Food Prices

WEST NEEDS TO RELOOK POLICY

By Prakash Nanda

Is the emerging food crisis all over the world going to have an adverse impact on the production of biofuel, which hitherto, was believed to be an effective alternative to the petroleum products?  There are reasons to believe so.

Addressing the World Food Summit at Rome early this month, Agriculture Minister Sharad Pawar had pointed out that additional demand for maize and rapeseed as feed stock for production of ethanol and bio-diesel and high input costs particularly energy prices have had the strongest impact on prices. 

While the quest of the world community for finding sustainable alternatives to fossil fuels is well appreciated, manufacture of biofuels at the cost of food grains needs to be examined in more depth.  As one study indicates, converting all of the world’s grains into ethanol may yield only about 11 per cent of the total world oil demand.  Simply put, even if we decided to convert all of the world’s grain into motor fuel we will still need to use a lot of fossil fuel and will not be having anything left to eat. 

Given such a scenario, the impact of diversion of land, which grows cereal for human consumption into production for biofuels, is likely to be self-defeating. Therefore, Pawar explained why India’s policy has been for the use of non-cereal biomasses, crop residues and for cultivation of jatropha on degraded and wasteland for biofuel production.  “Conversion of food grains and edible oil seeds for producing biofuel, prima facie is fraught with food security concerns as is evident already,” he said.

Is biofuel, then the real villain for the frightening food crisis in many parts of the world today?  It may be noted that the idea of turning farms into fuel plants seemed for a time, like an answer to the high global oil prices and supply worries.  That strategy appeared to reach a high point last year when the US Congress mandated a five-fold increase in the use of biofuels.

It is true that "Green" subsidies for biofuel crops are diverting agri-output away from food.  American farmers have diverted over 30 per cent of corn as part of a government-sponsored ethanol production scheme - aiming to reduce oil dependency and offset man-made global warming.  A fifth of the US corn crop is now used to brew ethanol for motor fuel, and as farmers have rushed to plant more corn, they have cut acreage of other crops, particularly soybean.  That, in turn, has contributed to a global shortfall of cooking oil.

Another stark fact in this context is that while over 240kg of corn would feed one person for a year, the same amount is required to produce just the 100 liters of ethanol needed to fill a SUV tank.

On 4th April, the BBC reported that no increase in global temperatures has been recorded by the World Meteorological Organisation since 1998, despite growing levels of carbon in the atmosphere. Instead, it has linked the 1998 recorded all-time high with El Nino with the recent cooling with La Nina - two vast Pacific Ocean currents. The advocates for biofuel, who consider dependence on traditional petroleum products to be the most important reason for global warming, certainly don’t like this.

With natural factors seemingly decisive to recent weather, and bitterly-cold winters in China (it’s coldest in a century) and in Central Asia and across North America, the biofuels gambit thus seems doubly-questionable. It fuels food price increases more efficiently than it does environment-friendly automobiles.

No wonder, a reaction is now building against policies in the United States and Europe to promote ethanol and similar fuels, with political leaders from poor countries contending that these fuels are driving up food prices and starving poor people.  Biofuels are fast becoming a new flash point in global diplomacy, putting pressure on Western politicians to reconsider their policies, even as they argue that biofuels are only one factor in food prices' seemingly inexorable rise.

Many specialists in food policy consider government mandates for biofuels to be ill- advised, agreeing that the diversion of crops like corn into fuel production has contributed to higher prices.  Work by the International Food Policy Research Institute in Washington suggests that biofuel production accounts for a quarter to a third of the recent increase in global commodity prices. Assuming that current mandates continue, the Food and Agriculture Organization of the United Nations at Rome predicted late last year that biofuel production would increase food costs by 10 to 15 per cent.

All this, however, does not mean that there is no opposite view. While agreeing that biofuels have been a factor in food price increases, Ethanol supporters maintain that it is relatively small and that energy costs and soaring demand for meat in developing countries have had a greater impact. 

It is further pointed out how the growing numbers of the middle class in developing countries such as China and India, who can now afford to eat better food, are the real reasons behind the food crisis. According to this argument, prices are soaring not because there is less food (in 2007 the world produced more grains than ever before) but because more people can afford to eat more.

Additional factors being raised in this context include the drought in Australia last year and the failure of many governments to increase agricultural productivity by undertaking more irrigation projects and heralding new green revolutions. Former US Under Secretary of agriculture August Schumacher, who is a consultant for the Kellogg Foundation, says the criticism of biofuels may be misdirected since development groups like the World Bank and many foreign governments have done little to support of agricultural development in the last two decades.  He stressed that upheavals over food prices abroad have largely concerned rice and wheat, neither of which is used as a biofuel.  For both those crops, global demand has soared.

Notwithstanding all these pleas, campaigners for biofuel are becoming increasingly defensive. No wonder that nearly two months ago, at a conference in Washington, finance ministers and central bankers of seven leading industrial nations called for urgent action to deal with the price spikes. Several of them demanded a reconsideration of biofuel policies adopted recently in the West.--INFA

(Copyright, India News and Feature Alliance)