Biofuels have forced global food prices up by 75% – far more than
previously estimated – according to a confidential World Bank report
obtained by the Guardian.The damning unpublished assessment is
based on the most detailed analysis of the crisis so far, carried out
by an internationally-respected economist at global financial body.The
figure emphatically contradicts the US government’s claims that
plant-derived fuels contribute less than 3% to food-price rises. It
will add to pressure on governments in Washington and across Europe,
which have turned to plant-derived fuels to reduce emissions of
greenhouse gases and reduce their dependence on imported oil.
Here is the story, the report is not yet available, at least not to me. Seventy-five percent seems like a high estimate to me, especially since many foods are more expensive but they are not all used for biofuels. Still, the government’s estimate of three percent is surely way too low. Biofuels are maybe a good test case for various estimates of government quality: will the bad biofuels still be subsidized five years from now?
This entire biofuels fiasco has been an appalling indictment of (not just the US) government and should give significant pause to those who see massive government intervention as the solution to our energy and environmental crises.
Seem to be saying that 75 percent of a 140 percent increase in food costs since 2002 is due to biofuels and income growth in India and China has not [repeat not] led to significant increases in grain consumption? Not credible, IMHO.
One should be careful of the percentages, base periods, and claims being made in this area–lots of people with an axe to grind. Also note that Keith Collins, retired USDA economist, has changed his position on the impact of biofuels.
Steve,
I have seen any papers indicating that biofuels consume more oil to produce then can be extracted from them.
So it’s likely that both oil and food prices decrease.
“will the bad biofuels still be subsidized five years from now?”
If Obama has anything to say about it, yes.
Wide crop choice does not apply in much of the Heartland. Farmers can raise corn or soybeans and in some cases wheat to earn a living. Most farmers rotate their crops with a mix of corn and soy beans.
Most of agriculture is tied to energy and its costs. Diesel, pesticides, fertilizer and other inputs are now so expensive that without the high prices farmers are getting for grain, they would go broke. Filling a tractor tank with fuel can, for example cost a thousand dollars.
Many farmers in our area cut back on their corn acreage because soy beans are cheaper to raise. Several proposed ethanol plants will not be built because corn is too expensive. A Danish company is building a plant near us which will manufacture an enzyme to make ethanol production much more efficient than it is now. Much of the ethanol byproduct feeds livestock. With this enzyme, little will be wasted and some by products will be consumed by people.
Switch grass, algae and other more efficient sources of energy will replace corn as technology improves.
The Omaha World Herald estimated soy diesel and ethanol cut $.30 per gallon from gasoline. They also attributed much of the food increase to greater world demand.
A potential problem is the 17 to 20 year drought cycle which has affected the corn belt for at least five hundred years. The last widespread corn belt drought occurred in 1988. Floods have killed up to ten percent of the corn crop this year. Suppose a drought begins in July and we have weeks of 95 to 105 degree weather.
Corn needs fairly early season dry weather to grow deep roots. With rain caused shallow roots and extreme heat, corn would suffer, even with ample sub soil moisture. It would be a perfect storm. Pray it keeps raining.
Not all foods need to be used in biofuel for the price to be affected. Take for example wheat products. Wheat products are more expensive now because farmers are realizing they can use the same acreage they’re currently using for wheat for corn and make a lot more money. This drives up the price of wheat, because now there’s less on the market.
Meat prices and milk prices have risen because feed for these animals (corn) is more expensive. We don’t use milk or animals in biofuel.
75% doesn’t seem high at all. The price increase in corn spurned on by the higher demand for biofuels which crowds out many other crops, even those not subsidized. Thus, it makes sense that all crops will be impacted by the biofuels subsidy.
Tulip Brain,
Shut up. Our government does lots of stupid things all of the time, there’s no need to defend it.
According to the Guardian story, the report blames biofuels for food commodity speculation, and includes speculation-related price increases in its “caused by biofuels” estimate. That’s a crock of s***, in my humble opinion.
It would be interesting to see how much of that 75% they think is caused by speculation.
Next up ..
I scanned through this piece and couldn’t come up with exactly what this “embarrassingly large supply” of cellulose comes from. I can think of a few, like corn husks and stalks, but the next most obvious are trees. While this may make old copies of the NYT and LAT valuable, some how I just can’t see the Sierra Club signing on if it involves large numbers of trees.
Why does Easter Island come to mind ? …
Ethanol production removes the starch from corn but leaves the minerals, protein and other nutrients in the distillers grain byproduct that is fed to cattle. Consequently, production of ethanol does not remove corn from the food chain as is assumed in all the analysis that blames the higher food prices on ethanol.
why pay any attention to an analysis that is based on completely false assumptions?
Also note that in the US grain accounts for less than 5% of the final cost of the food basket and corn is only part of that.
The entire analysis is making a mountain out of a molehill.
Look at a different analysis by someone who actually knows what they are talking about.
http://digitalcommons.unl.edu/ageconfacpub/49
‘Shut up. Our government does lots of stupid things all of the time, there’s no need to defend it.’
Actually, everyones government does stupid things all of the time.
Ususlly due to someone insisting that the government make them a winner – subsidies, rent controls, price floors, etc.
Lord, the answer is “the same as we have always done.”
Humans have always grown luxury crops, to make Champagne, Cuban cigars, and the like.
We seem to find some balance in that. It seems to be our nature to allow the affluent their luxuries if they in turn show the poor some appropriate concern.
The balance is interesting though and I wonder what an alien would make of it …
(As a human, I’d still kill the subsidies, and let my peers choose between Champagin and Feed the Children pledge drives. I suspect they’ll find a sense of balance.)
Ethanol subsidies would still be corrupting to our energy markets, even without this (so far) secret study.
Who do you want to decide between ethanol or biodiesel or simple efficiency, you (when you shop for a new car) or your congressman?
What did someone tell me at lunch … that GM wants a $7K tax credit for Volt buyers? Madness.
Tell me Anon and on, how exactly is it that prairie grasses managed to cover the midwest and great plains states for centuries before we arrived? Who was watering them? These grasses do not grow slowly, they grow several meters in a growing season. Maybe nature just didn’t tell you that it found a loophole in the laws of thermodynamics, or maybe your assumptions are just a bit incorrect. There is a reason these plants rule their particular evolutionary niches, and it was not because they lacked the ability to outgrow and outcompete other plants. We currently lack a good cellulosic energy path, but there are several promising avenues that are currently starting to show results (either direct conversion to syngas or breaking down the ligocellulose and then fermenting the sugars to produce ethanol.)
Sorry if reality has dealt you a bad hand here, but biofuels are going to be a substantial part of the US energy profile in the future. As we migrate to algal and cellulosic biofuel production we are going to be able to take advantage of the existing biofuel and liquid fuel production and consumption pathways to deliver the results without needing to rebuild or rewire our existing energy infrastructure.
The corn ethanol subsidy and the high tariff on imported ethanol roughly balance each other out as far as demand for ethanol fuel in the U.S. is concerned. If neither of these existed the U.S. would be using at least as much, if not more, ethanol, namely sugar ethanol imported from Brazil.
As usual the real cause of the food runup, which is the same as the cause of the great rises in practically all other commodities, namely the monetary problem, is ignored in favor of chasing an army of phantoms. You get nowhere addressing each commodity runup in isolation. It’s quite silly to believe that we are suddenly being assaulted all at once by a hundred plagues that just happen to independently drive up the price of each different commodity. But that’s what you have to believe to think it is useful to address each commodity price rise as if the other price rises and their common factor (increased inflation expectations for the floating currencies, dominated by the dollar and euro) did not exist.
I think we should go electrical and end this oil and bio fuel dilemma. I’m not sure what people should do with their cars… We can make a car donations center where people can donate their car and maybe in the future their engines will get replaced with electrical ones. Now that would be truly something.
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