Tuesday, 2 August 2011

Biofuels to blame for cereal price rise

This Guardian piece discussing a new FAO report on why the price of foods, and in particular cereals, keeps going up, suggests that at least one myth about food price increases has now been conclusively blown out of the water. There has been a lot of murmuring about how the food price rises must be the fault of China and India. The logic is that these countries have grown significantly in recent years and are now consuming at rates similar to those of developed nations (which, in itself, begins to call into question terms like 'developed nations'). In fact, it turns out grain consumption in India and China has barely increased.

The real culprit, it seems, is biofuels, and in particular the massive subsidies on biofuel production in wealthy nations, at the same time that food production subsidies are disappearing. If you subsidise the use of cereals to make fuel while simultaneously remove the subsidies that pay people to produce grain for foods, this result should not be unexpected.

Of course the reality of this is that expensive fuels from unstable regions tend towards the #firstworldproblems category while high and volatile food prices hit the poorest the hardest. So subsidising biofuel production may well be in the interests of 'first world' citizens, even though it is decimating the ability of poor people in developing countries to access food. Exacerbated by regulations which expressly prevent (politically weaker) poor nations from subsidising anything.

The other problem, of course, being that this brings the environmentalists onto a collision course with the development people. As much as 'sustainable development' (meaning environmentally sustainable) has been a popular buzz-word in aid and development circles, the fact remains that environmental concerns and human development projects are not automatically in sync. In fact, they seldom are. And at some point, sometimes, something has got to give. I'm not sure I'm comfortable with the 'something' being starvation and acute food insecurity in developing nations for the sake of being able to drive big cars and still claim to be environmentally friendly in the US.

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