Monday, March 24, 2008

Irrational Green Biofuel Exuberance Is 1 of 4 Major Causes of Food Price Increases

Testimony to the European Parliament Development Committee

by Josette Sheeran, Executive Director

UN World Food Programme

Thursday 6 March 2008

...Food prices have been aggressively increasing to historic highs.

There are four major drivers for this:

- the rise in oil and energy prices which affect the entire value chain of food production from fertilizer to harvesting to storage and delivering and access to water;

- the economic boom in nations such as India and China, creating increased demand for all commodities including food and forcing China, which was a major food exporter just a little more than one year ago, to now being an importer of food;

- increasingly harsh and frequent climatic shocks like hurricanes, floods and drought, have made for some bad harvests in particular regions like Australia and regions of Africa;

- and fourth is the shift to increased biofuels production that has diverted hundreds of millions of metric tonnes of agricultural output out of the food chain, and has caused food prices to be set at fuel price levels in many places, including, for example, palm oil in Africa which is now being priced out of household reach because it is being set at fuel prices as a biofuel addition.

Experts like Joachim von Braun, the Director General of the International Food Policy Research Institute, point out that food supply and fuel supply are now inexorably linked; triggering a competition between crops for food and crops for fuel that will affect food prices and supply for years to come. He raises the question that even if food production were to increase 20 percent this year would it go into fuel or would it go into food? For the first time in history we don’t know because it would go to the highest bidders on markets.

These high food prices are placing food out of reach for many of the world’s most vulnerable and especially for those living on less than US$1 a day. Of particular concern is the emergence of what I call the new face of hunger – hunger characterized by markets full of food with scores of people simply unable to afford it. These conditions have triggered food riots from Cameroon to Burkina Faso to Indonesia to Mexico and beyond. (pp 3-4)

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