Biofuel boom

A recent report by the Earth Policy Institute estimated that one quarter of the US corn crop is being channelled into biofuel production, raising fears of increased food prices and worldwide hunger. An excerpt from the report reads, “The amount of grain needed to fill the tank of an SUV with ethanol just once can feed one person for an entire year. The average income of the owners of the world’s 940 million automobiles is at least ten times larger than that of the world’s 2 billion hungriest people. In the competition between cars and hungry people for the world’s harvest, the car is destined to win.” The competition between biofuel and food, and the consequences for corn prices, is not a revelation. But the scale at which it occurs, as the report makes clear, is surprising. The push to ramp up production of corn-based ethanol in the US, as mandated by the Energy Independence and Security Act of 2007, was originally sold as a way to wean the country off foreign oil and help avert climate change. While it is clear that biofuel can contribute to domestic energy production, the ‘green’ argument suffered a serious setback in early 2008 when two papers in the journal Science showed that biofuel production can actually increase carbon dioxide emissions through indirect effects related to land-use changes. Then, later in the year, the Guardian published an unreleased report written by a World Bank economist estimating that biofuel production had increased the price of corn by 75 per cent. The report, which was written during a food crisis and seemed to place the blame on biofuels, was never officially released, according to an insider, to prevent embarrassment on the part of the Bush administration, which had cited much more modest price effects. The latest report re-invigorates the debate surrounding the competition between food and biofuel. But how strong are the claims made by the Earth Policy Institute and others? The role of biofuels in corn prices is difficult to measure, in part due to the numerous factors at work in the markets. In addition to reduced supply, which can be brought about through the diversion of corn to ethanol production, corn prices can be affected by increased demand from developing countries, fuel prices, droughts, and commodity speculation in the stock markets. This complexity is evident in the following statement from Professor Patrick Webb of the Friedman School of Nutrition, Tufts University, formerly Chief of Nutrition for the UN World Food Programme, who feels a more nuanced view is warranted: “It’s important not to forget that we recently went through a food price crisis, not a food crisis. There was no collapse in the world’s output of grains in 2007 or 2008; there was no physical shortage of food globally — indeed we had record output, in part driven by higher commodity prices for producers,” he said. “What we experienced was reduced stocks A new report suggests a large proportion of US corn production is now going into biofuels. Cyrus Martin reports on the implications. Biofuel boom