Biofuels Behind Soaring Food Prices: WB

CAIRO — Contradicting US claims, a confidential World Bank report said that biofuels have caused global food prices to skyrocket by 75 percent, reported the Guardian on Friday, July 4.

"Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate," the report said.

Biofuel, also called agrofuel, is the fuel derived from recently dead biological material, most commonly plants.

The report said the production of biofuels has distorted food markets in three main ways.

It has diverted grain into fuel, said the report, citing that more than one third of US corn is now used to produce ethanol and about half of vegetable oils in the EU going towards the production of biodiesel.

It said the biofuel production has made farmers setting land aside for biofuel production and has sparked financial speculation in grains, driving prices up higher.

The report said that food prices rose by 140 percent between 2002 and February 2008.

Biofuels have been accounted for a 75 percent of the increase, it said.

According to the UN Food and Agriculture Organization's world food index, dairy prices rose nearly 80 percent and grain 42 percent in 2007 alone.

With raging violent protests and fears of social discontent, many countries strained their budgets to maintain huge food subsidies.

Embarrassing

Though the report was drafted in April, it has not been published to avoid embarrassing the Bush administration.

"It would put the World Bank in a political hot-spot with the White House," a senior development source told the Guardian.

Bush has blamed soaring food prices for the high demand from India and China.

But the report ridiculed the claim.

"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."

Calls have been mounting for a moratorium on the use of biofuels.

"Political leaders seem intent on suppressing and ignoring the strong evidence that biofuels are a major factor in recent food price rises," said Robert Bailey, policy adviser at Oxfam.

"It is imperative that we have the full picture. While politicians concentrate on keeping industry lobbies happy, people in poor countries cannot afford enough to eat."

The United Nations Special Rapporteur for the Right to Food has described the booming industry of biofuel as a "crime against humanity".