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Biofuels
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Biofuels, food prices and
malnutrition
By Nick Louth
March 2008
China’s booming economy, a
spate of poor harvests across the world and the growing trend to
turn food into fuel for our cars are causing millions of people
to go hungry.
The international price of
wheat, maize (corn), soyabeans, and dozens of other foods has at
least doubled in the last two years, and in some cases have
nearly trebled.
World grain reserves are at
their lowest ebb since 1960, and the U.S. stockpile has not been
this low since 1948.
The granary is almost
empty
The United States, the
world’s biggest granary, no longer has much surplus grain to
export because most of the spare crop is being turned into
ethanol for cars. Australia, another big grain producer, has
been devastated by drought. The situation has been so bad ‘down
under’ that every four days on average an indebted farmer has
committed suicide.
Saudi Arabia, which perhaps
surprisingly is a big global wheat producer, is going to stop
production of the crop altogether. Despite the high market
prices, the irrigation requirements are depleting Saudi
underground aquifers, water that took thousands of years to
accumulate. Production, which was heavily subsidised, is being
cut by 12% a year and will cease by 2016, turning Saudi Arabia
from a large wheat exporter into an importer.
Rice is nice…if you can
afford it
Now the price of rice has
begun to soar too, caused by bad weather, soaring demand and
loss of paddy fields to urban encroachment. Rice, on which two
thirds of the world’s population depend, has seen prices up 75%
in the last year at nearly $500 tonne, a level not seen since
1989. Vietnam, India and Egypt, three of the world’s key
suppliers are restricting exports to make sure they can meet
domestic demand.
Robert Zeigler,
director at the International Rice Research Institute in Manila,
said policymakers should be concerned. “If history is any
indicator, we should be worried because rice shortages have in
the past led to civil unrest,” he told the Financial Times.
Last month, the United
Nations World Food Programme said that the cost of its
programmes to provide food to 78m hungry people in 80 countries
would rise from $2.9bn to $3.5bn. The WFP, which is entirely
funded by voluntary donations, doesn’t yet have the extra
money.
In a small way, we can help.
The world food programme has an addictive little word game,
ideal for children, which tests your vocabulary. Advertisers to
fund the donation of 20 grains of rice for each word correctly
defined. Give it a try on:
www.freerice.org
No great difficulties for
the west
We certainly notice the
price of food increasing here. Bread prices have risen, eggs
have gone up by 30% in a year, and meat prices are on the rise
too, reflecting the increased cost of animal feed. It is no
coincidence that this week saw 500 disgruntled British pig
farmers demonstrate in Downing Street about the poor prices they
get from supermarkets, which after paying for feed leave them
out of pocket.
But it is in developing
nations that food prices really bite. We spend less than 15% of
our disposable income on food in the west. In India, Bangladesh
and the Philippines that figure is at least half, and often much
more among the poorest families. A price rise that is an
inconvenience for us can make the difference between eating
adequately and going hungry.
Food, the ultimate
political issue
Hunger and malnutrition have
real, political effects. One of the cause of the Tiananmen
Square riots in China in 1988 was soaring food prices. Mexicans
were already demonstrated about the rising cost of flour for
tortillas a year ago, while just last month Indonesians took to
the streets in Jakarta to bemoan the cost of soyabeans which had
jumped 50% in just one month.
The fact that rich
westerners are able to buy grains just to power their cars while
those in the third world struggle to afford one meal a day has
not gone unnoticed. Countries like India and Mexico have
subsidised flour prices to ease the effect on the poor. Other
big importers, like Algeria, Egypt and Iran, may be forced to do
the same.
The reasons why…
China’s economic growth is
probably the biggest single reason for soaring food prices. With
hundreds of millions of people having left the land to work in
the cities over recent decades, incomes are rising and the
demand for meat, principally pork and chicken, is soaring.
Industry figures suggest that three quarters of the increased
demand for soyabeans is coming from China where they are used to
fatten pigs.
In the U.S. huge federal
subsidies to farmers to grow corn to turn into ethanol for fuel
have been prompted by the rising price of oil. This has led to a
surge in corn acreage, as farmers switched from other grains.
This in turn has led to shortages and price rises in soyabeans,
wheat, barley and other crops.
In Europe, the same mistakes
have been made. The European commission plans to mandate that by
2010, 5.7% of vehicle fuel must come from biomass. This will
come from rape seed oil, sugar beet, wheat and some agricultural
waste.
Hans-Willem Windhorst, of
the University of Vechta in Germany, has calculated that for the
EU to meet its 2020 target for biofuels, of 10% of all vehicle
fuel, a quarter of all European arable land will have to be
turned over to producing biofuels.
Land substitution
Brazil is the world’s
biggest soyabean exporter, and much of it goes to feed pigs. As
the newly wealthy urban population of China eats more pork,
soaring prices encourage Brazilian farmers to burn down rain
forest to grow more. The soaring price of timber, again partly
fuelled by Chinese demand, makes that even more worthwhile. But
for global warming, loss of rainforest is a disaster.
The same thing has happened
in Africa, Malaysia and Indonesia, prompted by surging prices
for palm oil.
What can be done?
Nothing can be done about
Chinese demand, or about the poor harvests that have hit many
different kind of crops recently. There is some good news in
that after torrential rain in recent weeks, Australia’s drought
is over in most areas. Next year’s wheat harvest may be good. It
certainly needs to be.
The one really unnecessary
part of this is turning food into biofuel. While there are
plenty of ‘second generation’ biofuels on the drawing board
which would use plant waste and other non-food materials to
substitute into fuel, most of the subsidy money is still going
into turning food into fuel.
For that, there’s really no
excuse.
Hear a podcast interview
with Nick Louth
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