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Rediff.com  » Business » It wasn't India! Biofuels caused food crisis

It wasn't India! Biofuels caused food crisis

July 04, 2008 16:04 IST
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Remember, when US President George W Bush blamed India's prosperity for global food crisis? A few months back, President Bush in an interactive business session had argued that while prosperity in countries like India is good, it triggers increased demand for better nutrition, which in turn leads to higher food prices.

The comments came close on the heels of US Secretary of State Condoleezza Rice's controversial statement that 'apparent improvement' in the diets of people in India and China is among the causes of the current global food crisis.

A report published in British daily, the Guardian, rubbishes this notion.  A confidential World Bank report obtained by the daily, says that global food prices have shot up by 75 per cent thanks to higher production of biofuels.

Guardian says that this damning unpublished report was prepared by Don Mitchell  an internationally acclaimed economist of the Bank.

The paper pointed out that the figure emphatically contradicts the US government's claims that plant-derived fuels contribute less than 3 per cent to food-price rises.

This piece of data is likely to put pressure on government in the US and Europe, who in their zeal to cut greenhouse emission and ever-increasing dependence on imported oil have banked heavily on the production of biofuels.

The news comes at a time when leaders of the G8 countries will meet in Hokkaido, Japan, to discuss global food crisis, among other raging issues.

The daily said that the Bank estimates that rising food prices have pushed 100 million people worldwide below the poverty line.

Interestingly, the research found that successive droughts in Australia have had a marginal impact compared to the EU and US' drive for biofuels.

Quoting the Bank report, Guardian said had there been no such exponential increase in biofuels, global wheat and maize stocks would not have declined to this extent.

The report, said Guardian, argues that production of biofuels has distorted food markets in three main ways:

  • 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.
  • Farmers have been encouraged to set land aside for biofuel production.
  • It has sparked financial speculation in grains, driving prices up higher.
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