Sunday, July 06, 2008

Pushback momentum...

Regardless of your position on the food-fuel debate, it would appear that the anti-biofuel forces have got game.  Newer studies are underlining what first glances imply - you can't divert agriculture to fuel without adverse consequences for food.
"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.

It argues that production of biofuels has distorted food markets in three main ways. First, 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. Second, farmers have been encouraged to set land aside for biofuel production. Third, it has sparked financial speculation in grains, driving prices up higher.  [More]
[Update: Tyler Cowen mirrors my response about the 75%-3% swing in effect.  Both are probably wrong.]

As ethanol proponents activate their own expert responses, the ensuing debate carefully sidesteps the issue that is life-or-death for too many global citizens: How can we afford food?

As troubled as I am about our choice to subsidize a dubious substitute energy source,  I am equally heartened to see the vigor with which advocates of a more rational energy policy are entering the fray.  We may yet find a path that allows most people to make decisions to comprise a market that overrides fatuous government policy.

1 comment:

Bill Harshaw said...

I suspect one difference in analysis is the definition of "food"--if the World Bank study is using the prices of rice, wheat, corn, etc. while studies looking at the U.S. are looking at bread, etc. we're talking apples and oranges.