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Putting biofuels in perspective

by Oxfam | June 6, 2011


Only a few hours after our campaign report was released, a major biofuels lobby group put out a statement critiquing Oxfam’s assessment that the boom in biofuels has pushed food prices higher across the world. The Global Renewable Fuels Alliance insists biofuels production is good for poor people, and cites a report by the UN’s Food & Agriculture Organization to back up the claim.

Read the FAO report, however, and you’ll discover its conclusions are more circumspect: that the impact of biofuels production in poor countries on food prices and food security depends on what crop is used and how it is managed.

The FAO report goes on to warn: “First generation bioenergy developments represent an additional source of demand for crop production which can lead to price increases, unless followed by adequate investment in agriculture and related infrastructure to support a supply response that would maintain stability in prices.”

And that is the key problem which Oxfam cites in “Growing a Better Future”: The massive use of corn for ethanol by Canada and the United States – a third of the entire crop – diverts an awful lot of food from the market. Less corn is being exported, even though more corn is being produced.

Because the US and Canada together grow 40 percent of all the corn in the world, this diversion drives up the price for everyone.

Canada, the US and Europe now require a minimum ethanol or biodiesel content in transport fuels. This government mandate artificially creates a market incentive to continue turning food into fuel, no matter the impact on eating.

The G20 is now considering whether to endorse introducing some flexibility into biofuels mandates so that the minimum content rules can be waived when food prices are high.

Perhaps we can’t hold the biofuels industry responsible for the perverse outcomes of mistaken public policies. But neither should we accept the claims of their lobbyists as the whole story.

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