Secret World Bank Report: Biofuel Caused Food Crisis

[jAZ]

http://www.guardian.co.uk/environment/2008/jul/03/biofuels.renewableenergy

Secret report: biofuel caused food crisis
Internal World Bank study delivers blow to plant energy drive
Aditya Chakrabortty The Guardian, Friday July 4, 2008

Biofuels have forced global food prices up by 75% - far more than previously estimated - according to a confidential World Bank report obtained by the Guardian.

The damning unpublished assessment is based on the most detailed analysis of the crisis so far, carried out by an internationally-respected economist at global financial body.

The figure emphatically contradicts the US government's claims that plant-derived fuels contribute less than 3% to food-price rises. It will add to pressure on governments in Washington and across Europe, which have turned to plant-derived fuels to reduce emissions of greenhouse gases and reduce their dependence on imported oil.

Senior development sources believe the report, completed in April, has not been published to avoid embarrassing President George Bush.

"It would put the World Bank in a political hot-spot with the White House," said one yesterday.

The news comes at a critical point in the world's negotiations on biofuels policy. Leaders of the G8 industrialised countries meet next week in Hokkaido, Japan, where they will discuss the food crisis and come under intense lobbying from campaigners calling for a moratorium on the use of plant-derived fuels.

It will also put pressure on the British government, which is due to release its own report on the impact of biofuels, the Gallagher Report. The Guardian has previously reported that the British study will state that plant fuels have played a "significant" part in pushing up food prices to record levels. Although it was expected last week, the report has still not been released.

"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."

Rising food prices have pushed 100m people worldwide below the poverty line, estimates the World Bank, and have sparked riots from Bangladesh to Egypt. Government ministers here have described higher food and fuel prices as "the first real economic crisis of globalisation".

President Bush has linked higher food prices to higher demand from India and China, but the leaked World Bank study disputes that: "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."

Even successive droughts in Australia, calculates the report, have had a marginal impact. Instead, it argues that the EU and US drive for biofuels has had by far the biggest impact on food supply and prices.

Since April, all petrol and diesel in Britain has had to include 2.5% from biofuels. The EU has been considering raising that target to 10% by 2020, but is faced with mounting evidence that that will only push food prices higher.

"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," says the report. The basket of food prices examined in the study rose by 140% between 2002 and this February. The report estimates that higher energy and fertiliser prices accounted for an increase of only 15%, while biofuels have been responsible for a 75% jump over that period.

It argues that production of biofuels has distorted food markets in three main ways. First, it has diverted 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. Second, farmers have been encouraged to set land aside for biofuel production. Third, it has sparked financial speculation in grains, driving prices up higher.

Other reviews of the food crisis looked at it over a much longer period, or have not linked these three factors, and so arrived at smaller estimates of the impact from biofuels. But the report author, Don Mitchell, is a senior economist at the Bank and has done a detailed, month-by-month analysis of the surge in food prices, which allows much closer examination of the link between biofuels and food supply.

The report points out biofuels derived from sugarcane, which Brazil specializes in, have not had such a dramatic impact.

Supporters of biofuels argue that they are a greener alternative to relying on oil and other fossil fuels, but even that claim has been disputed by some experts, who argue that it does not apply to US production of ethanol from plants.

"It is clear that some biofuels have huge impacts on food prices," said Dr David King, the government's former chief scientific adviser, last night. "All we are doing by supporting these is subsidising higher food prices, while doing nothing to tackle climate change."

[Silock]

Who DIDN'T know this?

I think it was pretty damn obvious as early as 3 years ago that that shit was going to hit our fans.

[jiveturkey]

The whole Food = Fuel idea was one of the dumbest ever.

[pikesome]

The whole Food = Fuel idea was one of the dumbest ever.

It's in the running.

I understand producers like having more/larger markets and higher prices. These things help growers. But various peoples have gotten used to the price/availability of foodstuffs and when that changes, someone's taking it in the seat, at least for a while.

[BucEyedPea]

The whole Food = Fuel idea was one of the dumbest ever.

Ayuppp! Implemented by govt of course and not the market! The market is just responding as it ALWAYS has the last say.

Wonder how many Ds and Rs voted for this or should I say caved into the Ethanol Lobby?

And govt action and policy has contributed to high energy prices too.

Wake up and smell the coffee folks.

[HonestChieffan]

I cant buy this...

1) Corn used for ethanol is not corn used for human consumption
2) The by product, the corn mash as it were, is used as animal feed. Yes it has lower animal nutrition value but its still ultilized.
3) Bio-Diesel made from soybeans only uses one componant of SB-oil. The SB meal is still used as animal feed with the exact same nutritional value.
4) To discredit droughts in major crop areas as a contributor is absurd
food prices reflect far more after the farm cost than at the farm cost. Look at prices paid to farmers for beef cattle, hogs, and chicken pre and post the biofuel run up.
5) Food cost is heavily impacted by transportation and processing costs as well as packaging.
6) The devaluation of the dollar has to play in the equasion.

[BucEyedPea]

I cant buy this...

1) Corn used for ethanol is not corn used for human consumption

Then why is there so much high fructose corn syrup in the American diets today? Before the 1970's there was hardly any even if there was more sugar consumption. I'll tell ya' why because it's cheap which is related to subsidies. It is a leading cause in the epidemic of diabetes in this country.


2) The by product, the corn mash as it were, is used as animal feed. Yes it has lower animal nutrition value but its still ultilized.
They were better off eating grasses including the herbs in such grasses, some of which warded off disease as they had medicinal properties.

Everything on our plates has some corn or corn derivitive in it which affects the price of a lot more food items. This is not the first market catastrophe caused by the incompetent U.S. Department of Agriculture (USDA) which expanded federal power into this area with subsidies.

Overweight and Overpriced!

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[HonestChieffan]

Then why is there so much high fructose corn syrup in the American diets today? Before the 1970's there was hardly any even if there was more sugar consumption. I'll tell ya' why because it's cheap which is related to subsidies. It is a leading cause in the epidemic of diabetes in this country.



They were better off eating grasses including the herbs in such grasses, some of which warded off disease as they had medicinal properties.

Everything on our plates has some corn or corn derivitive in it which affects the price of a lot more food items. This is not the first market catastrophe caused by the incompetent U.S. Department of Agriculture (USDA) which expanded federal power into this area with subsidies.

Overweight and Overpriced!

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Certainly cannot argue with the point on the state of peoples health and bad diet habits. You may want to have a better understanding of subsidy issues before that becomes the blame for people eating at McDonalds and sitting on their collective asses. And the reason high fructose corn syrup has a economic advantage over sugar is the tariff we apply to sugar camoflaged as a sugar subsidy to protect a tiny and very vocal sugar beet industry. And regrdless, the corn meal post fructose processing is sold as cattle feed as well.

Not the place to help you understand how a calf gets to the plate but sufice it to say if a cattleman could deliver beef to the market cheaper by grazing and not have to feed any supplemental feed, he would.

What you see on your plate may have been so priced as a result of our need for pre packaged processed foods, beautiful packaging that wepay a fortune for..the styrofoam platter your hamburgers ( preformed and perfectly round) is a oil product as is the celophane wrapper and that little rag thing to hide the bloodd that seeps from the ground beef. The beef was transported to the store by a diesel burning reefer that someone has to pay for since we would never tolerate not being able 24 hurs a day, to have our grocery store open lights on and staffed so we can score a bag of chips.

So lets be a little honest...theres way more bull in blaming corn for the price of your 7 grain loaf of healthy bread

[BucEyedPea]

I don't really need to know everything about how a calf is brought to my plate.
I do need to know how markets work. The fact still remains, govt policy and subsidization of American agriculture has an affect on what farmers do and what they decide to do. It happened with wheat earlier in the century too. Let farmers decide what to do and let people decide if it's too high a price to pay so long as they are informed. This is why I buy organic beef....so someone is doing it differently.

[HonestChieffan]

"Organic" beef cattle eat corn. Damn it. They also can graze on pastures that have sprayed with herbicides and fertilized annually.

[BucEyedPea]

"Organic" beef cattle eat corn. Damn it. They also can graze on pastures that have sprayed with herbicides and fertilized annually.

Not all of them. And I doubt it's GM corn either. No antibiotics or hormones.

Grass Fed Cattle (http://www.mindfully.org/Farm/Grass-Feed-Cattle19jun02.htm) Suppliers can barely keep up with the demand. There's debate in the culinary community surpassing enviro and political issues. It's about taste.

Grass Fed Beef Supplier (http://www.alderspring.com/)

Grassfed Beef Coalition (http://www.organicgrassfedbeef.org/)

[banyon]

Manufacturing a Food Crisis By Walden Bello
This article appeared in the June 2, 2008 edition of The Nation.

May 15, 2008



When tens of thousands of people staged demonstrations in Mexico last year to protest a 60 percent increase in the price of tortillas, many analysts pointed to biofuel as the culprit. Because of US government subsidies, American farmers were devoting more and more acreage to corn for ethanol than for food, which sparked a steep rise in corn prices. The diversion of corn from tortillas to biofuel was certainly one cause of skyrocketing prices, though speculation on biofuel demand by transnational middlemen may have played a bigger role. However, an intriguing question escaped many observers: how on earth did Mexicans, who live in the land where corn was domesticated, become dependent on US imports in the first place?

The Mexican food crisis cannot be fully understood without taking into account the fact that in the years preceding the tortilla crisis, the homeland of corn had been converted to a corn-importing economy by "free market" policies promoted by the International Monetary Fund (IMF), the World Bank and Washington. The process began with the early 1980s debt crisis. One of the two largest developing-country debtors, Mexico was forced to beg for money from the Bank and IMF to service its debt to international commercial banks. The quid pro quo for a multibillion-dollar bailout was what a member of the World Bank executive board described as "unprecedented thoroughgoing interventionism" designed to eliminate high tariffs, state regulations and government support institutions, which neoliberal doctrine identified as barriers to economic efficiency.

Interest payments rose from 19 percent of total government expenditures in 1982 to 57 percent in 1988, while capital expenditures dropped from an already low 19.3 percent to 4.4 percent. The contraction of government spending translated into the dismantling of state credit, government-subsidized agricultural inputs, price supports, state marketing boards and extension services. Unilateral liberalization of agricultural trade pushed by the IMF and World Bank also contributed to the destabilization of peasant producers.

This blow to peasant agriculture was followed by an even larger one in 1994, when the North American Free Trade Agreement went into effect. Although NAFTA had a fifteen-year phaseout of tariff protection for agricultural products, including corn, highly subsidized US corn quickly flooded in, reducing prices by half and plunging the corn sector into chronic crisis. Largely as a result of this agreement, Mexico's status as a net food importer has now been firmly established.

With the shutting down of the state marketing agency for corn, distribution of US corn imports and Mexican grain has come to be monopolized by a few transnational traders, like US-owned Cargill and partly US-owned Maseca, operating on both sides of the border. This has given them tremendous power to speculate on trade trends, so that movements in biofuel demand can be manipulated and magnified many times over. At the same time, monopoly control of domestic trade has ensured that a rise in international corn prices does not translate into significantly higher prices paid to small producers.

It has become increasingly difficult for Mexican corn farmers to avoid the fate of many of their fellow corn cultivators and other smallholders in sectors such as rice, beef, poultry and pork, who have gone under because of the advantages conferred by NAFTA on subsidized US producers. According to a 2003 Carnegie Endowment report, imports of US agricultural products threw at least 1.3 million farmers out of work--many of whom have since found their way to the United States.

Prospects are not good, since the Mexican government continues to be controlled by neoliberals who are systematically dismantling the peasant support system, a key legacy of the Mexican Revolution. As Food First executive director Eric Holt-Giménez sees it, "It will take time and effort to recover smallholder capacity, and there does not appear to be any political will for this--to say nothing of the fact that NAFTA would have to be renegotiated."

Creating a Rice Crisis in the Philippines

That the global food crisis stems mainly from free-market restructuring of agriculture is clearer in the case of rice. Unlike corn, less than 10 percent of world rice production is traded. Moreover, there has been no diversion of rice from food consumption to biofuels. Yet this year alone, prices nearly tripled, from $380 a ton in January to more than $1,000 in April. Undoubtedly the inflation stems partly from speculation by wholesaler cartels at a time of tightening supplies. However, as with Mexico and corn, the big puzzle is why a number of formerly self-sufficient rice-consuming countries have become severely dependent on imports.

...

During the 1994 campaign to ratify WTO membership, government economists, coached by their World Bank handlers, promised that losses in corn and other traditional crops would be more than compensated for by the new export industry of "high-value-added" crops like cut flowers, asparagus and broccoli. Little of this materialized. Nor did many of the 500,000 agricultural jobs that were supposed to be created yearly by the magic of the market; instead, agricultural employment dropped from 11.2 million in 1994 to 10.8 million in 2001.

The one-two punch of IMF-imposed adjustment and WTO-imposed trade liberalization swiftly transformed a largely self-sufficient agricultural economy into an import-dependent one as it steadily marginalized farmers. It was a wrenching process, the pain of which was captured by a Filipino government negotiator during a WTO session in Geneva. "Our small producers," he said, "are being slaughtered by the gross unfairness of the international trading environment."

...African Agriculture: From Compliance to Defiance

De-peasantization is at an advanced state in Latin America and Asia. And if the World Bank has its way, Africa will travel in the same direction. As Bryceson and her colleagues correctly point out in a recent article, the World Development Report for 2008, which touches extensively on agriculture in Africa, is practically a blueprint for the transformation of the continent's peasant-based agriculture into large-scale commercial farming. However, as in many other places today, the Bank's wards are moving from sullen resentment to outright defiance.

At the time of decolonization, in the 1960s, Africa was actually a net food exporter. Today the continent imports 25 percent of its food; almost every country is a net importer. Hunger and famine have become recurrent phenomena, with the past three years alone seeing food emergencies break out in the Horn of Africa, the Sahel, and Southern and Central Africa.

Agriculture in Africa is in deep crisis, and the causes range from wars to bad governance, lack of agricultural technology and the spread of HIV/AIDS. However, as in Mexico and the Philippines, an important part of the explanation is the phasing out of government controls and support mechanisms under the IMF and World Bank structural adjustment programs imposed as the price for assistance in servicing external debt.

Structural adjustment brought about declining investment, increased unemployment, reduced social spending, reduced consumption and low output. Lifting price controls on fertilizers while simultaneously cutting back on agricultural credit systems simply led to reduced fertilizer use, lower yields and lower investment. Moreover, reality refused to conform to the doctrinal expectation that withdrawal of the state would pave the way for the market to dynamize agriculture. Instead, the private sector, which correctly saw reduced state expenditures as creating more risk, failed to step into the breach. In country after country, the departure of the state "crowded out" rather than "crowded in" private investment. Where private traders did replace the state, noted an Oxfam report, "they have sometimes done so on highly unfavorable terms for poor farmers," leaving "farmers more food insecure, and governments reliant on unpredictable international aid flows." The usually pro-private sector Economist agreed, admitting that "many of the private firms brought in to replace state researchers turned out to be rent-seeking monopolists."

The support that African governments were allowed to muster was channeled by the World Bank toward export agriculture to generate foreign exchange, which states needed to service debt. But, as in Ethiopia during the 1980s famine, this led to the dedication of good land to export crops, with food crops forced into less suitable soil, thus exacerbating food insecurity. Moreover, the World Bank's encouragement of several economies to focus on the same export crops often led to overproduction, triggering price collapses in international markets. For instance, the very success of Ghana's expansion of cocoa production triggered a 48 percent drop in the international price between 1986 and 1989. In 2002-03 a collapse in coffee prices contributed to another food emergency in Ethiopia.

...

http://www.thenation.com/doc/20080602/bello

[BucEyedPea]

Herbicides in organic farming are organic herbicides too HCF. Things like spices, vinegar etc.
That and the cattle eat the weeds.

BTW I had a relative who was head of the Ames Lab out there in Iowa for years. What do you think the cause of Mad Cow disease was? Feeding herbivore's animal parts from their own kind in their diets. He explained it to me one day.

[Hog Farmer]

You guys really need to watch this press conference from Governor Perry. It is split into( 4 ) 8 minute videos. Mentions my farm (not by name) in the first video at 3:45 in.

Part 1: http://www.youtube.com:80/watch?v=OMua7L1UISw&feature=related


Part 2: http://www.youtube.com:80/watch?v=fr6s7owa088&feature=related


Part 3: http://www.youtube.com:80/watch?v=zf1GDAZVhJk&feature=related


Part 4: http://www.youtube.com:80/watch?v=xeNvJR3iojA&feature=related

[HonestChieffan]

One reason for Ag policy is to maintain a consistant supply. One of the blessings we have here in NA is a high quality and very consistant supply of the widest range of food..fresh as well as processed. Subsidy may be a dirty word to some but we dont suffer shortages daily on any food proucts.

[HonestChieffan]

Herbicides in organic farming are organic herbicides too HCF.
That and the cattle eat the weeds.

BTW I had a relative who was head of the Ames Lab out there in Iowa for years. What do you think the cause of Mad Cow disease was? Feeding herbivore's animal parts from their own kind in their diets. He explained it to me one day.

Organic is tossed around in too many ways...the definition for organic and organically grown are ofen not or very poorly defined.

If I raise my calves and never vaccinate them, to somr that is organic. I do not have to feed organically grown hay, corn, or supplements and they can graze on herbicide treated pastures. I would defy you to show me a "organic herbicide" that is commercially available and in use for weeds in pastures on a commercial scale.

[BucEyedPea]

One reason for Ag policy is to maintain a consistant supply. One of the blessings we have here in NA is a high quality and very consistant supply of the widest range of food..fresh as well as processed. Subsidy may be a dirty word to some but we dont suffer shortages daily on any food proucts.

You don't need an Ag policy, particularly the one we have, to maintain a consistent supply. It creates other distortions in the market. It is best to allow those closest to the problem, the farmer or cattle raiser and the people ( both are the market) to make those decisions as the results will meet their needs better. I can't believe I am even talking to a Republican about this.

Farmers responded to the post–World War I crop price collapse [caused by govts] by lobbying for government guarantees of perpetual high crop prices. Calvin Coolidge vetoed two bills to establish federal controls over agricultural commodities. He declared, “Government price-fixing once started, has alike no justice and no end. It is an economic folly from which this country has every right to be spared.”

How the Feds took over farming (http://www.lewrockwell.com/bovard/bovard22.html)

Yup everyone has their stake in the govt trough! While we pay for it in taxes and in prices.
You do know that bread has over a 100 taxes on it right?

[BucEyedPea]

Organic is tossed around in too many ways...the definition for organic and organically grown are ofen not or very poorly defined.

If I raise my calves and never vaccinate them, to somr that is organic. I do not have to feed organically grown hay, corn, or supplements and they can graze on herbicide treated pastures. I would defy you to show me a "organic herbicide" that is commercially available and in use for weeds in pastures on a commercial scale.

Prove it because I just checked it and you are indulging in half-truths and lack of information. There is a difference between natural and organic but organic has guidelines. I believe those have been passed into law even. You can't use the word "commercial" in this argument.


Organic Trade Association; Definition of Organic (http://www.ota.com/definition/nosb.htm)

[Hog Farmer]

One reason for Ag policy is to maintain a consistant supply. One of the blessings we have here in NA is a high quality and very consistant supply of the widest range of food..fresh as well as processed. Subsidy may be a dirty word to some but we dont suffer shortages daily on any food proucts.


Not yet, my friend but the next two years we WILL see shortages meaning higher prices. Pork is expected to have to increase by 65% next year to allow ANY producers to survive.

[HonestChieffan]

Organic has a definition and its quite strict, the issues with it have been enforcement and follow up/inspections. In the beef industry this has been an issue for a number of years. The consumer should feel absolutely confident when they buy Organic it actually meets the standards set by USDA.

Im not in an agruement...so please dont take it as such. I just do not know of any "organic herbicides" that are available for a cattle producer to use on weeds in a pasture nor can I find any references to these online...maybe my bad googling.

[BucEyedPea]

Organic has a definition and its quite strict, the issues with it have been enforcement and follow up/inspections. In the beef industry this has been an issue for a number of years. The consumer should feel absolutely confident when they buy Organic it actually meets the standards set by USDA.

Im not in an agruement...so please dont take it as such. I just do not know of any "organic herbicides" that are available for a cattle producer to use on weeds in a pasture nor can I find any references to these online...maybe my bad googling.

You keep changing the goal posts. I wonder why you're not a Democrat.

[BucEyedPea]

HCF,
I think I know why you believe in agri-socialism now. Aka govt central planning in agrindustry. You raise calves/beef/meat therefore you are the beneficiary of govt handouts/subsidies courtesy of the US taxpayer I gather? I betcha' this is true. How you can argue against any D or Obama for the state subsidizing health insurance courtesy of the taxpayer is beyond me.

[banyon]

HCF,

YOU'VE BEEN LABELED!

[BucEyedPea]

:thumb: Absolutely spot on!:thumb:

NTTAWWT since you support labelman.

http://www.cfsan.fda.gov/~ear/hwm/labelman.png

So long as there is truth in labeling it's legit...and since he supports agri-socialism aka central govt planning in agri-business then it's accurate and true.:thumb: