Early Warning had a post recently decrying the proposed emergency policy of the Spanish Govt. to increase the biofuel content in their petrol. One follow up post then used US data for ethanol production to extrapolate the impact of US production to global food prices. Thus linking the unrest in North Africa and around the gulf states with the increased cost of food due to biofuels (as indicated by corn ethanol). But root causes of the increased cost of food are more complex than that.
Stuarts prime beef seems to be with the corn to ethanol conversion: many authors have argued that the conversion efficiency is poor - but it is probably the final act of a greater tragedy. Outside of the Americas, is corn a primary human staple? Even within the US its prime function seems to be as energy source for feed lot produced beef and a major ingredient in the US staple of fast foods (including supermarket ready meals).
While I agree that biofuels may be problematic, lumping all cereal crops together and then assuming that because 40% of US CORN production is going to ethanol that that is the cause of the rise in food prices seems to overly and dramatically simplify the issue.
Various international agencies have pointed out that the rise in GLOBAL food prices is a complex issue, with different causes in different regions.
The Overseas Development Institute has a report out that says (my emphasis added):
Rising food prices: Cause for concern
Policy conclusions
Food prices have been rising since the early 2000s • but spiked in early 2008. Even if they start to decline later this year, the next ten years will see food prices at levels above those seen in the early 2000s, thanks to higher energy costs, demand for biofuels, growing demands for staples as populations grow, and for higher value foods, such as livestock products, as incomes rise.• Prompt assistance is needed for countries facing surging food and energy import bills and for low-income households
• Low stocks threaten the functioning of agencies such as the WFP and prompt calls for land to be switched back into food production, from biofuels throughout the OECD, and from “set-aside” in the EU.
• In the medium term, economic and agricultural growth can offset the damage, but this will require more determined efforts to boost food production.
• Beyond action, a better understanding is needed of the 2008 price spike, to ensure that such events are rare. Increased variability of weather from climate change makes future price spikes more likely. If more can be learned from the current shock, then dealing with future ones may be easier.
Why have food prices risen so much in recent years?
The prices of staple foods on world markets have fallen substantially in real terms over the last 50 years, with wheat in 1999 at less than a quarter of its 1950 price. Since the early 2000s, however, food prices have been rising. Within the 12 months up to early 2008, the FAO food price index rose by 57%. The causes of these price rises are both short- and long-term.
The former include, above all, low harvests in some exporting countries — notably Australia where drought has hit wheat production — against already low world cereal stocks. Speculation in commodity prices by investors looking for a better option than stocks and shares may also have contributed. Some countries, alarmed by mounting prices, have imposed taxes, minimum prices, quotas and outright bans on exports of staples that have exacerbated world price rises.The oil price rise also feeds through to the demand side: once oil prices rise above US$60 a barrel – it is currently well over $100 – most forms of biofuel compete with oil and gas, so that foods may be diverted to energy production. This is reinforced by targets in both USA and the EU, and by subsidies to refiners in the USA.
The main effects will of course be on the poor (US not included) where 1/3rd to 1/2 of household income may be spent on food. However the higher food prices may also stimulate reinvestment in farm production, which in lower income countries is labour intensive, thus partially offsetting the effects through increased employment. Thus this report suggests that, yes, biofuels have an impact, but that low harvests, speculation and “panic” (ie restricting exports) all played a part. The politically motivated farm subsidies of the US are a particular problem.