LONDON — Using plants to feed our fuel needs may be a great
idea, and the biofuel goldrush could be a moneyspinner for several poor
countries, but some experts warn people may go hungry as food prices rise.
Fans of biofuels give the impression we could soon be running
cars on maize, producing electricity with sugar, and getting power from palm
oil.
Even though the biofuel boom is only just beginning, it has
already pushed up the cost of staples in places like Mexico where rocketing
tortilla prices have sparked angry protests.
Some experts foresee a permanent change in food economics if
farmers scent higher profit in fuel crops than in growing plants to feed people.
"We’re into a new structure of markets," said British food
aid expert Edward Clay. "It could have profound implications on poor people."
World leaders promised in 2000 to halve by 2015 the
proportion of people, estimated at 1.2 billion or a fifth of humanity in 1990,
who live on less than a dollar a day and who suffer from hunger.
According to the 2006 review of progress towards the goal, an
estimated 824 million people in the developing world were affected by chronic
hunger in 2003, mostly in sub-saharan Africa and southern Asia.
Oil prices have roughly tripled since the start of 2002 to
above $60 a barrel and as oil resources held by Western firms dwindle, biofuels
have seemed viable and the message about climate change has gone mainstream.
Governments and oil companies are seeking alternative fuel
sources and U.S. President George W. Bush has made it clear he supports a major
shift towards biofuels.
Farmers in the United States are raising production of maize,
now a lucrative material for biofuel production. Soaring U.S. demand for ethanol
– produced from crops like maize and sugar cane – has sent maize prices to their
highest level in a decade.
Mexicans are feeling the impact. Tens of thousands took to
the streets in January when the price of tortillas tripled to 15 pesos ($1.36) a
kg. There are about 35 of the flat maize patties that are Mexico’s staple food
in a kg.
Since half of Mexico lives on $5 a day or less, that’s no
small jump, and President Felipe Calderon – a conservative who is a firm
believer in free markets – intervened to cap prices.
Food costs as a proportion of incomes have been on a downward
slide since World War Two, at least in the West. Clay says one of the big
questions now is whether biofuels could reverse that process and take us into a
new economic era which might be yet harder on the poor.
Although he says the current spike in prices will be
temporary, he is not convinced food prices will fall back to pre-biofuel boom
levels.
"By next year, (food) prices will begin to fall away," he
predicts. "But that doesn’t mean they’ll ever fall to what they were before."
The United States and Brazil, the world’s top biofuels
producers, are not the only countries jumping on the biofuels bandwagon. China
has joined them and now ranks in the global top four for biofuels output.
The incentive to switch land use from food crops to fuel
crops mounts with rising biofuel demand, potentially underpinning prices.
Also maintaining upward pressure on food prices are the twin
needs of economic boomers China and India to be self-sufficient in fuel, but
also in food. China’s expanding middle classes want to eat more meat, which
requires grain production for feed, in turn keeping food prices high.
While food prices are likely to be dampened by farmers
increasing food crop production in the short term, the scope for switching is
limited.
Numerous scientists and economists say China and India do not
have enough water to increase grain production, whether for animals or fuel.
The biofuel boom may also change policies on food aid.
Now US farmers can make good money selling grain to make
ethanol, there could be a shift in its policy of giving 99 percent of food aid
contributions in goods, rather than cash.
It might now actually be more convenient for the United States to buy its
food aid allotment elsewhere, food aid expert Clay says.
