Corn ethanol and biofuels production has driven global food prices up 75%, triggering a global food crisis according to a secret World Bank report revealed by the London Guardian. The report was apparently kept secret to protect the United States which is most responsible for the diversion of food to fuel. The World Bank, released a report on Wednesday, July 2, on the jump in food prices without specifying the cause (PDF).
Food prices have accelerated sharply in 2008. Grain prices have more than doubled since January 2006, with over 60% of the rise in food prices occurring since January 2008 (Figure 1). Individual grain staple prices have increased even more, with monthly average wheat prices doubling since January 2006. Rice prices more than tripled between January and May 2008.
The Guardian's source reveals that the report, which contradicted U.S. claims that biofuel production had a tiny effect on food prices, was covered up to protect the Republican administration.
The figure emphatically contradicts the US government's claims that plant-derived fuels contribute less than 3% to food-price rises. It will add to pressure on governments in Washington and across Europe, which have turned to plant-derived fuels to reduce emissions of greenhouse gases and reduce their dependence on imported oil.
Senior development sources believe the report, completed in April, has not been published to avoid embarrassing President George Bush.
"It would put the World Bank in a political hot-spot with the White House," said one yesterday.
The whistleblower exposed the secret report just ahead of next week's G-8 meeting in Japan addressing the food crisis. Activists plan to contest the diversion of food to fuel at the G-8 meeting. The rising price of food is stressing poor families in the U.S., but in the third world it is causing people to go hungry, triggering food riots.
Food riots are erupting all over the world. To prevent them and to help people afford the most basic of goods, we need to understand the causes of skyrocketing food prices and correct the policies that have fueled them.
World food prices rose by 39 percent in the last year. Rice alone rose to a 19-year high in March -- an increase of 50 per cent in two weeks alone -- while the real price of wheat has hit a 28-year high.
As a result, food riots erupted in Egypt, Guinea, Haiti, Indonesia, Mauritania, Mexico, Senegal, Uzbekistan and Yemen. For the 3 billion people in the world who subsist on $2 a day or less, the leap in food prices is a killer. They spend a majority of their income on food, and when the price goes up, they can't afford to feed themselves or their families.
Bush must not be allowed to shift the blame to economic growth in China and India. U.S. ethanol production from corn, not changing diets in China, is responsible for skyrocketing food prices.
"Political leaders seem intent on suppressing and ignoring the strong evidence that biofuels are a major factor in recent food price rises," said Robert Bailey, policy adviser at Oxfam. "It is imperative that we have the full picture. While politicians concentrate on keeping industry lobbies happy, people in poor countries cannot afford enough to eat."
Rising food prices have pushed 100m people worldwide below the poverty line, estimates the World Bank, and have sparked riots from Bangladesh to Egypt. Government ministers here have described higher food and fuel prices as "the first real economic crisis of globalisation".
Droughts in Australia and the western U.S. also played a very minor role in the huge increase in global food prices. Skyrocketing fuel and fertilizer prices only accounted for 15% of the food price increases.
"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," says the report. The basket of food prices examined in the study rose by 140% between 2002 and this February. The report estimates that higher energy and fertiliser prices accounted for an increase of only 15%, while biofuels have been responsible for a 75% jump over that period.
Federal mandates for biofuel production must be postponed until crops or processes that don't use or displace food crops are developed. We are starving the poor to fuel our SUVs.
And the average American is getting no break on gasoline prices while rising food prices are out of control. That's the price we pay for the gross inefficiency of producing fuel from corn.
Subsidies and mandates for grain ethanol production must be terminated. They are killing poor children and hurting average Americans.