The Guardian, a U.K. newspaper, has revealed the existence of a "confidential" internal report written by Don Mitchell, a senior economist at the World Bank. The report allegedly places heavy blame for the world's current food crisis upon the increased use of grains to make ethanol and biodiesel. The report is said to contain a month-by-month analysis of world food prices, and this apparently shows a link between biofuels and increased food prices.
The report states that use of foodstocks to make biofuels has affected food prices in three primary ways:
1) Grains have been diverted from food production to fuel production. About one third of the United States' corn production is being used to make ethanol. About one half of the vegetable oils in the EU are being used to make biodiesel.
2) Farmers are being encouraged to set aside land for crops to be used to make biofuels instead of food.
3) Promotion of biofuels has ignited financial speculation in grains, thus sending prices higher.
The disclosure of the World Bank's report comes at an inconvenient time. Leaders of the G8 countres are going to be meeting in Hokkaido, Japan, next week in order to discuss what to do about the current food crisis. There has been increasing opposition to the use of biofuels in recent months, and I have written about this in prior issues of this newsletter. The World Bank's report alleges that biofuels have driven up world food prices by as much as 75%. The US government has claimed that biofuels have caused food prices to rise by less than 3%. Some "sources" mentioned by the Guardian have postulated that the report (completed in April) has been suppressed because it contradicts the official US position.
The US has recently experienced catastrophic storms and floods in the midwest. These disasters have taken a significant amount of our farmland out of production for the time being, thus exacerbating an already fragile situation. Food prices are going to continue to go up. There have been reports that US farmers have had to slaughter their livestock because it has become more difficult and expensive to feed them. Thus, higher meat prices can be expected as this year progresses.
In the US, the primary biofuel is ethanol. There have been conflicting studies as to how much energy it takes to produce each unit of ethanol energy. However, the consenus seems to be that it takes about 1 unit of corn energy to make about 1.25 units of ethanol energy. Sugarcane has a better ratio. So does switchgrass. At best, corn-based ethanol is only slightly "energy-positive."
It is completely irresponsible to divert much-needed food away from people and to use it to fill gas tanks!