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World Bank Report: Biofuels Have Contributed Almost Half of the Increase in Global Food Prices

The UK Guardian reports that a confidential World Bank report obtained by the newspaper concludes that biofuels have contributed almost half of the global increase in food prices—a much larger contribution to the price increases than estimated previously. Of the 140% increase from 2002 through this February in the basket of food prices examined in the study, the report estimates that biofuels have been responsible for a 75% jump, while higher energy and fertilizer prices accounted for an increase of 15%.

Among the conclusions of the report, according to the Guardian:

  • Rapid income growth in developing countries (e.g., India and China) has not led to large increases in global grain consumption and was not a major factor responsible for the large price increases.

  • Successive droughts in Australia have had a marginal impact.

  • The EU and US drive for biofuels has had by far the biggest impact on food supply and prices.

  • 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.

  • Biofuels derived from sugarcane have not had such a dramatic impact.

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 Gallagher Report on the impact of biofuels, to be released by the British Government, is expected to state that biofuels have played a “significant” part in pushing up food prices to record levels.

Separately, the AP reported that the European Union will stick to its binding target of at least 10% biofuel use in the transportation sector by 2020.

The European Commission is sticking to its proposal that biofuels account for at least 10 percent of energy used by the EU's huge transportation sector by 2020, because voluntary targets have failed miserably so far, EU spokesman Michael Mann said.

The European Commission has said higher food prices are the result of increased demand for meat and dairy products, particularly in China and India, bad weather in 2006 around the world and speculation in the price of grains and other crops.



This is not a surprise. It was well known that using food stocks to produce ethanol for our gas guzzlers would quickly contribute to much higher world food prices.

Corn ethanol is definately not an acceptable cure for liquid fuel higher prices and shortages.

With many more grain-corn ethanol plants under construction, the food shortage situation may very well get worse, specially if the mid-west weather acts up again.

A more effective measure may be to consume less liquid fuel by rapidly buying smaller more efficient vehicles, specially electrified vehicles such as PHEVs and BEVs. However, massive production may take another 2 or 3 years. Meanwhile, be prepared for much higher food and fuel prices.

Transforming wastes into usable fuel would be a better idea than using essential food stocks. Here again, it will take 4 to 5 years before a significant number of plants are built.

A certain degree of personnal demotorization may be unavoidable as many more people will not be able to afford fuel for the gas guzzler + food for their familly. Many will have a broken heart when their long term love affair with the huge 4 x 4 will come to an end.


I wonder how many petroleum company officials sat on this board?Boifuels can not possibly account for this big a change,when you consider the other causes are quite powerful(weather issues,Chinas newfound prosperity,diesel prices,poor trade policies etc.)I'm glad they chose a number(75%) that was so obviously a lie.Yes corn ethanol is energy and water intensive,but it doesn't drive the price of rice,wheat and other staples(if you produce corn flakes you can't replace the ingredients with cheaper commodities).The petroleum industry is scared to death of ethanol because with cellulosic ethanol we will be freed from the noose oil has put around our necks.Corn ethanol will die a quiet death while ethanol is produced from waste.People will be able to retrofit their current car to run on E100 and the air,water and land will be cleaner.


I want to see this report. Because I wouldn't trust the Guardian for a dime.

The Guardian is known to be an extreme reactionary newspaper that has been lieing about biofuels like no other.

I stick to the scientific reports available, the most important one being that of Wageningen University, which shows that the contribution has been extremely marginal.

As is well known, Wageningen is the world's leading university and research center dealing with agricultural economics.

So the Guardian will have to show the report if it wants to make a point.

Until it does so, I consider the Guardian to be an enemy of the world's developing countries.

Or, like Lula says, the Guardian is one of the actors committing crimes against humanity by destroying the biofuels opportunity.


Also, let's not forget that the UK is heavily against biofuels, because it has no agricultural sector to speak of. Biofuels will benefit France, Germany, Poland, Central Europe and a vast range of developing countries, but not the UK.

The UK has been the most questionable anti-biofuels propagandist of the EU. A partner not to be trusted.

So this government-pushed report doesn't come as a surprise.


Middleoroad isn't very middle road, but wishes to drive further off the road to harvest more corn stalks to stuff in his bio-fuel tank. Middleoroad is blind to the upward prices of food, when gas tanks hog energy that would normally supply energy for human bodies. M is blind to the interconnectiveness of all food stuffs, nations & the world. But M is most blind to the poor who have no money to pay for food because M has the corn in his gas tank.

Food riots have killed or injured people or caused damage & looting in Haiti(4 dead), Cameroon (40 dead), Mozambique(4 dead), Egypt, Cote de Ivorie, Senegal, Yemen, Mauritania, Bolivia, Indonesia, Mexico, India, Burkina Faso, & Uzbekistan.

Following M & all bio-fuel advocate dictates will kill & wound more people & damage & cause more looting. The very poor have always starved. We have kept our eyes closed & did not witness the starving. U.S. & European bio-fuel policies are the direct death causing factors of the STARVED & the KILLED. But we surely will not see their deaths because we will more tightly hold our eyes closed.


Interestingly Ed Gallagher is head of the Renewable Fuels Agency in UK. The majority of food increase comes from commodity traders speculating on grain and vegetable oil prices.

The cost of energy independence will be readjustment to financial structure of many markets. The speculators will eventually realize that grain and veg oil biofuels are being clobbered in the "food or fuel" drama. They can then move on to bidding up the prices on hog manure, wood chips, municipal waste, algae, and other feedstocks for second gen biofuels.

And like so many things in this world - it's WAY over-hyped.


How come we don't see reports about the impact on food prices by other non-food crops such as tobacco, cotton,sugar,tea coffee,...? Or what about quality land used for golf courses and shopping mall parking lots, sprots fields etc.


Tehco...All land use policies are interconnected. What has fallen like rocks on the oldest & most crowded countries will fall, & is falling like rocks on North, Central, & South America.

Your golf course question is answered in the following: A Japanese golf enthusiast, got on an airplane, flew to America, played a round of golf, & returned to Japan. His cost for that venture was less than if he had bought a round of golf in Japan. Me....I just go to the river or sea & sling rocks...cost is free.


Let's blame it all on the World Bank:


Turning food into Ethanol makes food price higher. Some where else forests are cleared away to plant food crops. End result is a net increase in carbon dioxide emission. This is a perfect example of the corn lobby snatching defeat from the jaws of success.


Suspect political agenda skewing data. Is this report accurate? Well, it is certainly hard to see how corn used to make ethanol in the US drives up the price of rice in India. Does India import corn? Do they import American rice?

fred schumacher

I would really like to see the methodologies used for coming to this biofuels conclusion.

They downplay the role of two successive Australian wheat crop failures and then blame the increased price of wheat on biofuels, when very very little wheat is used for that purpose?

And somehow an extra 10% of the U.S. corn crop going into ethanol blows out food prices all over the world, when U.S. yellow dent corn is a feedgrain not human food, and 40% of the bulk used for ethanol is fed to cattle as distillers grains, and U.S. set a record for export shipments of corn at the same time?

It doesn't compute.


Food or fuel,
Sounds like a straw man to me. I thought hat question was already answered. The very real concerns have been answered, sourcing biofuels from food stocks and land degradation are serious issues that appear to be being addressed except maybe the corn ethanol industry (food)
And corrupt Asian palm sugar style deforestation's.
As food prices increase, so the economics drive the ethanol producers to the wall.
I mostly agree the world bank analysis is one eyed. The costs to agriculture from fossil fuel and doubling and tripling of fertilizer inputs changing climate and environmental degradation suggest the 75 -15% figures should be reversed.
The Murray - Darling river with intensive irrigation system provides over 80% of Australia's food supply.
Is basically in meltdown. The outlook is so dire that the only approach left (with the available understanding we have) is to see the (virtual) end of irrigation and (it goes without saying more widespread unviable farming).

That's certainly more than a 15% contribution.
If the remaining 10% is inflation, then most of that needs be added to the input costs.

Somewhere amongst this (I'm no economist) The same costs applicable to ordinary increase say now 24% can be seen as affecting bio fuels as well.
That is why IE the corn ethanol producers are shelving or abandoning projects and going bankrupt taking with them no small sums of subsidies and shareholders moneys.
2nd gen bio fuels have this in hand (at least the theory).


modern industrial corn production is a feedstock literally for animals and for industry. High fructose corn syrup in used in lots of foods as a sugar substitute. It gets fed to everything. By lowering the amount available, you get substituition ripples as other things are used in it's place. Am I defending the conclusion, no. But I can see that some people don't have a whole view on the market. The same substituition effects also happen in the energy sector and effect electricity prices even if the sources in one juridiction have nothing to do with fossil fuels.

Kit P.

Secret report? The best I can tell, journalists are more interested in selling newspapers than feeding the hungry. When was the last time that hunger was caused by a food shortage, rather than some other root cause like corrupt governments using food as a weapon to control people?


I don't think Biofuels are the cause, they're merely a symptom. A symptom for heavily subsidized food and "development aid".
What most countries do nowadays shouldn't even be considered development aid.

fred schumacher

I woke up in the middle of the night rethinking this "secret" report. We're all focusing on the wrong thing.

For three centuries, food prices have been declining in real terms (see Fernand Braudel's THE STRUCTURES OF EVERYDAY LIFE), resulting in dangerously low rural cash flows, flight of rural poor to urban slums, and inability to use best agronomic practices for food production.

The primary subsidy flow in food has been from producer to consumer, with a small return subsidy flow from government to producer to forestall collapse of the food production system.

Food production is primary; food price is secondary. Putting the major emphasis on price is the wrong focus.

World food production, after receiving a bump from the Green Revolution, is now struggling to meet the needs of a wealthier world wanting higher quality food, primarily meat, and continuing population increase.

The Philippines doubled their population in the last two generations without increasing rice production. Australia, once a major exporter of rice, has switched to viniculture because of long-term drought-caused water shortages in the Murray-Darling River system, as mentioned by arnold, above.

Whatever the reason for the recent spike in food prices, they have come just in time to rescue rural life and food production.

Mark S

Corn ethanol doesn't use food grain. This is just New World Order propaganda used to terrorize people into dependent submission. If "poor people" ever figure out they can make they're own energy and food the Global Elite are "Royally" screwed. Funny how all the dumbass liberals fall for this type of Capitalist Pig Bullshit.

Biofuel: Have your fuel and eat it too.


It is obvious for anyone with a brain, that bio fuel is not a solution to global warming. For most bio fuels, so much energy is used in the processing, that the net carbon footprint is often actually half of that fossil fuel gives. Even fossil natural gas is better than corn ethanol. Sugar canes and palm oil grow fast and efficient, but destroys the rain forest. There is simply not enough land to both feed the population and produce bio fuels for their cars. There are so many reasons, anyone really should be able to understand that bio fuels isn't a solution. Clean nuclear energy should be used for transportation, trains and electric vehicles.


Outside the sun shines, the garden provides fresh, breakfast, healthy food. It occurs to me, thinking on Fred's post that recent released report hat the majority of the wolds population has moved fro agriculture to urban living. Archaeologist of the future will mark this transition as an evolutionary change.
For those living today It means that increasing numbers are reliant on others to feed us. The food travels thousands of 'food miles' consumes large amounts of fossil fuels and transport miles in the daily or weekly shop. Processing to a uniform long life product with little nutritional value etc.
While there are arguments for and against the current methods associated with food production, staying on topic . The simple fact is there is growing demand on diminishing resource. ( diminishing if you like because the small - village - household production is going going. Fish stocks worldwide are in free fall.
This has little to do with bio fuels.

I should point out that the article successfully managed to confuse many of us by saying that "75% of the 140% increase in food price rises."
Very pleased to see that the bulk of comments reject the world banks interpretation.


Viticulture under threat,
Enhanced greenhouse implications for viticulure (which underwent explosve growth in the past several decades) are forcing producers to consider new ares for growing wine grapes.
Viticulture for wine production is a long term undertaking with mature vines and selection requiring stable climates and twenty year lead times.
Try google or your favourite search engine.


The key to understand the corn ethanol problem is to think about the substitution effect. When a farmer planting something switches to corn for ethanol production, the supply of the original plant goes down, and its price has to go up. Feed stock price increase is another factor.

Corn's low energy conversion rate does not help here.


Commenting on secret or unpublished reports second or third hand is bound to be a tall order.

1; facts do not always equal truth.
2; the truth is not always factual.
Previous reports on this site have shown us that the E.U. various other bio fuel interests have already decided not to support food based biofuels, so in this sense the Headline grabbing leaked report is confusing - if not misleading depending on how informed the reader.
The organisations IE Oxfarm who are demanding action at the G8 summit opening in Japan are suppliers of food aid which we could assume is just the "basket of food " that is most adversely affected. That is corn or maize and wheat.

We do not know specifically which foods are included in the unpublished report, but the language and hints do suggest it refers to the bulk traded commodities that have been monitored on a monthly basis by their senior economist Don Mitchell.

No sane person should diminish or downplay the gravity or accuracy of the report, in the proper context.
This is a report released on the 3-7-08, one day prior to the Guardian article.

Roger Pham

Oil for Food is Okay, but not Food for Oil, please! Food for Oil is totally repugnant ethically and morally speaking.

If Moses is around today, he would have cited God's 11th commandment, soon to come out:

"Thou shall not turn food into oil and thereby starving thy fellow humans."

Mark S

Corn ethanol does not cause farmers to change land use.

Corn ethanol uses feed corn which otherwise would go to waste. It merely fractionates the corn kernel to extract the useless starch. The by-product is an bio-active stimulant comparable to microbial enzyme supplemented livestock feed.

Corn ethanol reduces the need for corn acres as well as soybean acres. We have a very long way to go before all the cattle, swine and poultry feed is processed and the flour and sweet corn is even considered. Then we'd just be eating a Zone Diet of DDGS.

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