Bank Conceals Biofuel Crisis

07 Jul 2008

According to a leaked World Bank report, biofuels have been responsible for forcing global food prices up by 75 percent, far more than previously estimated and in vast contradiction to the US government’s claim that plant-derived fuels have contributed less than 3 percent to the food-price rises.

The confidential report, obtained by the Guardian last week, provides the most detailed analysis of the crisis so far. The World Bank’s internationally renowned senior economist Don Mitchell undertook a month-by-month analysis of increased food prices, allowing a detailed examination of the link between biofuels and food supply.

Food prices investigated in the research rose by 140 percent between 2002 and February 2008. The report estimates that higher energy and fertilizer prices accounted for around 15 percent of this increase, while biofuels have been responsible for a 75 percent leap over that period. Sugarcane derived biofuels, which Brazil specializes in, have not had such a dramatic impact according to the findings.

The news comes at a critical time in international negotiations regarding biofuels policy, with leaders of the G8 industrialized countries to meet this week in Japan to discuss the food crisis. The British government was due to release its own report on the impact of biofuels, the Gallagher Report, last week.

The findings will put increased pressure on US and European governments that have turned to plant-derived fuels in a bid to reduce greenhouse gas emissions and their dependence on imported oil. The Guardian reported that senior development sources believe the report, which was finished in April, has remained unpublished to avoid placing the World Bank in political dispute with the White House.

‘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 report argues that production of biofuels has distorted food markets in three main ways: diverting 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; by encouraging farmers to set aside land for biofuel production; and because crops for biofuel have sparked financial speculation in grains, driving prices up higher.

Source:
The Guardian

Bess Mucke
[email protected]

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