Food price rises: are biofuels to blame?

Biofuels – that is, the product of crops grown for energy rather than food or feed – are being blamed for the sudden rise in food prices. As farmers move into biofuels, the argument runs, less land is dedicated to traditional crops, creating shortages and rising prices.

According to a ‘secret’ World Bank report, the shift to biofuels accounts for as much as three quarters of the recent world food price rises. This is much higher than the United States’ official estimate that biofuels caused rises of no more than three per cent.

There is a very real problem. Rising food prices, coinciding with rising fuel prices, are cutting into many countries’ incomes. World Bank president Robert Zoellick told the Group of Eight leading industrial countries in Japan that 41 countries had lost between three and 10 per cent of GDP to the price hikes, and that 30 countries had experienced food riots over the last year.

The argument that biofuels are to blame is made on the basis of a very narrow interpretation, however. The turn to biofuels is relatively recent. The US and Europe both appealed to environmentalists’ fears when they put in place policies that supported a switch to biofuels. In fact, their motivation was less to save the planet and more to shore up economic protectionism, reducing reliance on oil imports. In the very short term, it is probably true that the switch to biofuels did ramp up prices.

Still, that is to look at the short-term. The long-term trend is much more telling. The real reasons for today’s ‘perfect storm’ are two different pressures colliding. The first is rising incomes in the developing world – especially India and China. This is, despite the gloom-mongering of environmentalists like the Worldwatch Institute, a very positive development. As people earn more, they eat more, and have more meat-rich diets. The other pressure, on the supply side, is the one that very few people are willing to talk about.

For more than 20 years now, both the US and the European Union have pursued policies designed to reduce food output. They have introduced policies that reward farmers for retiring land from production (such as the EU’s set-aside and wilderness schemes). At the same time, the United Nations has used its aid programmes to penalise African farmers who try to increase yields with modern fertilisers or mechanisation.

One indicator of the success of the programme of retiring farm land is the growth of massive national parks, like those in the Minkebe Forest in the west African state of Gabon (1.4million acres), in the Amazon Region Protected Areas (122million acres), or the US national parks and forest land that grew from one quarter to one third of America’s total land area between 1990 and 2002.

The programmes of land retirement and reservation have been so successful worldwide that between 1982 and 2003, national parks grew from nine million square kilometres to 19million, 12.5 per cent of the earth’s surface – or more than the combined land of China and South-East Asia. In the US more than one billion acres of agricultural land is lying fallow. So the idea that land has been lost from ordinary crops to biofuels is not really true; rather, it has been lost from agricultural production altogether.

For the environmentalist critics, blaming biofuels is a desperate act of scapegoating. For years now, they have been propagandising against mass food production, favouring a return to less efficient farming methods, and for the return of farmland to its natural state. It was environmentalists who lobbied for the Brundtland Report, Our Common Future, that biased UN programmes against modern farming techniques in Africa (in favour of ‘appropriate’, which is to say poor ‘technologies’). Just when it suited large-scale agriculture to wind down output to protect prices, the environmentalists were on hand to support land retirement schemes. Farmers, according to Britain’s Countryside Agency, would no longer farm, but become stewards of the countryside.

But where you do not sow, neither do you reap. The green policy of reducing farm output is the reason for the shortages that are forcing up prices. For years now, environmentalists have been telling us that we are too greedy. Now they have got their way, and are forcing people to consume less.

Environmentalists are feeling a bit nervous lately that economic recession will undermine their cause. So rather than accept responsibility for their own actions, they are busy putting the blame on President George W Bush for his biofuel policy, and on farmers for following it.

Biofuels might not be the most efficient use of land or labour as things stand, but there is in principle no reason that we should not grow more energy in the years to come. Already ethanol production is an important source of revenue in Brazil, and the energy yield is increasing all the time.

The solution to the food shortages in the short term is not to blame biofuels, but to put more of the surplus farmland back into production. In the longer term, the application of higher-yield grains and fertilisers, along with more extensive mechanisation in Africa, will lay the basis for food surpluses, and also take pressure off land and labour.

James Heartfield is a director of Audacity.org. His new book Green Capitalism: Manufacturing Scarcity in an Age of Abundance is available to buy directly from his website at www.heartfield.org.

Sources:

Lester Brown, Who will Feed China?, Worldwatch, 1995

Paul Driessen, Eco-Imperialism, 2004

James Heartfield, ‘Two cheers for agri-business’, Review of Radical Political Economics, 32, 2, 2000

James Heartfield, Green Capitalism: Manufacturing Scarcity in an Age of Abundance, 2008

Feeding and fuelling the future, Stanford News Service