News & Observer | newsobserver.com | Inflation spurs biofuel backlash

Published: Apr 15, 2008 12:30 AM
Modified: Apr 15, 2008 05:01 AM

Inflation spurs biofuel backlash

Higher food prices across the globe cause many to question the wisdom of using crops to make ethanol

Officers force food rioters into a police truck in Port-au-Prince, Haiti, last week.

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The idea of turning farms into fuel plants seemed, for a time, like one of the answers to high global oil prices and supply worries. That strategy reached a zenith last year when Congress mandated a five-fold increase in the use of biofuels.

Now a backlash is building against policies in America and Europe to promote ethanol and similar fuels, with political leaders in poor countries contending that they are driving up food prices and starving poor people.

Biofuels are fast becoming a flash point in global diplomacy, forcing Western politicians to reconsider their policies, even as they argue that biofuels are only one factor helping to drive up food prices.

The higher prices are sparking riots, political instability and growing worries about feeding the poorest people. Food riots contributed to the dismissal of Haiti's prime minister last week, and many other countries are nervously trying to calm anxious consumers.

At a weekend conference in Washington, the world's economic ministers called for urgent action to deal with the price spikes, and several of them demanded a reconsideration of biofuel policies adopted recently in the West.

Many experts in food policy consider government mandates for biofuels to be ill-advised, agreeing that the diversion of crops into fuel production has contributed to higher prices. But other factors have played big roles, including droughts that have limited output for some crops and rapid global economic growth that has sparked higher food demand.

That growth, much faster over the last four years than the historical norm, is lifting millions of people out of destitution and giving them the means to eat better diets. But farmers are having trouble keeping up with the surge in demand.

Work by the International Food Policy Research Institute, in Washington, suggests that biofuel production accounts for a quarter to a third of the recent increase in global commodity prices. The Food and Agriculture Organization of the United Nations predicted late last year that biofuel production, assuming current mandates continue, would increase food costs by 10 to 15 percent.

Ethanol supporters agree that biofuels have been a factor in food price increases, but they maintain that it is relatively small and that energy costs and soaring demand for meat in developing countries have had a bigger impact.

"There's no question that they are a factor, but they are really a smaller factor than other things that are driving up prices," said Ron Litterer, president of the National Corn Growers Association and an Iowa farmer.

He said biofuels are an "easy culprit to blame" because they have grown so rapidly in the last two or three years.

Support in D.C.

Sen. Charles Grassley, R-Iowa, called the recent criticism of ethanol by foreign dignitaries "a big joke." He questioned why they were not also blaming a drought in Australia that decimated the wheat crop and the growing demand for meat in China and India.

"You make ethanol out of corn," he said. "I bet if I set a bushel of corn in front of any of those delegates, not one of them would eat it."

The senator's comments reflect a political reality in Washington: Despite the criticism from abroad, support for ethanol in Washington remains solid.

Rep. James McGovern, D-Mass., said he has come to realize that Congress made a mistake in backing biofuels, not anticipating the impact on food costs. He said Congress needs to reconsider its policy, though he acknowledged that would be difficult.

"If there was a secret vote, there is a pretty large number of people who would like to reassess what we are doing," he said.

Global food prices have increased by 83 percent in the last three years, according to the World Bank. Rice, a staple food for nearly half the world's population, has been a particular focus of concern in recent weeks, with spiraling prices prompting several countries to impose drastic limits on exports as they try to protect domestic consumers.

On Monday, President Bush ordered that $200 million in emergency food aid be made available to "meet unanticipated food aid needs in Africa and elsewhere," according to a statement.

Food crops slashed

Skeptics have long questioned the value of diverting food crops for fuel, and the grocery and livestock industries vehemently opposed a new energy bill last fall, arguing that it was driving up their costs.

A fifth of the nation's corn crop is now used to brew ethanol for motor fuel, and as farmers have rushed to plant more corn, they have cut acreage of other crops, particularly soybeans. That, in turn, has contributed to a global shortfall of cooking oil.

The spreading global unrest of recent months has intensified the food-vs.-fuel debate. On Friday, for instance, an advisory panel to the European Environment Agency urged the European Union to suspend its goal of having 10 percent of transport fuel made from biofuel by 2020. Europe's well-meaning rush to biofuels, the scientists concluded, had produced a slew of harmful ripple effects, from deforestation in Southeast Asia to higher prices for grains.

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