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World Bank report: Biofuels force food prices rise by 75%

July 06th, 2008 | Xinhua

A secret World Bank report has shown that biofuels have forced world food prices up by 75 percent, disputing U.S. President George W. Bush’s claims that higher demand from India and China has led to higher food prices, according to a report issued in Friday’s Guardian.

The report, which was completed in April and obtained by the Guardian newspaper, is based on the most detailed analysis of the food crisis conducted by Don Mitchell, a senior economist with the World Bank.

“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,” said the leaked report.

The 75-percent figure sharply contradicted the claims by the U.S. government that biofuels contribute less than 3 percent to food price hikes.

The report argued that the European Union (EU) and U.S. drive for biofuels has put by far the biggest impact on food supply and prices.

It will also serve to put pressure on U.S. and European governments which advocate switching to biofuels to reduce emissions of greenhouse gas as well as dependence on imported oil.

Sources believed that the report was not published so as not to embarrass the U.S. government.

Leaders of the Group of Eight (G8) industrialized countries are expected to meet next week in Hokkaido, northern Japan, to mete out policies on biofuels and food crisis, while the British government is also to release the Gallagher Report on the impact of biofuels.

The new figure will add great pressure to both the G8 meeting and the upcoming British policy.

The World Bank estimated that rising food prices have plunged some 100 million people across the world below the poverty line, causing riots from Bangladesh to Egypt.

Since April, all petrol and diesel in Britain has included 2.5 percent from biofuels. The EU has been considering a even higher target of 10 percent by 2020.

“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,” said the report.

The food prices examined in the study rose by 140 percent between 2002 and this February, with estimated higher energy and fertilizer prices accounting for a 15-percent rise and biofuels responsible for a 75 percent hike.

The report argued that production of biofuels has distorted food markets by diverting grain away from food for fuel with farmers being encouraged to set land aside for biofuel production.

In addition, it has driven financial speculation in grains, driving prices up higher.

Category: Climate Change