Friday, May 30, 2008

Biofuel versus food?

Yesterday, the Food and Agriculture Organization (FAO) and the Organization for Economic Coordination and Development (OECD) released their joint Agricultural Outlook 2008-2017. The Report makes for sobering reading. All of the commodities covered in the report (cereals, oilseeds, sugar, meats, milk and dairy products) are at record highs. When the average for 2008 to 2017 is compared with that over 1998 to 2007, the Report projects that
beef and pork prices may be some 20% higher; raw and white sugar around 30%; wheat, maize and skim milk powder 40 to 60%; butter and oilseeds more than 60% and vegetable oils over 80%.

The Report attributes these price increases to fundamental changes in demand (ethanol and increased demand for meat in developing countries) as well as changes in agricultural productivity due to climate change. It seems that higher food prices are here to stay.
The only glimmer of good news comes in the form of FAO/OECD projections that prices will retreat from their record highs. Of course, these projection rest on the assumption that weather patterns have been only temporarily disrupted and will return to "normal." Even if this optimistic projection about the effects of climate change is proved right, prices that are merely elevated will still put hundreds of millions at risk of hunger and malnutrition.

Food insecurity is growing
The FAO's slogan is "helping to build a world without hunger." It seems a fairly modest goal, particularly since Nobel Laureate Amartya Sen convincingly demonstrated decades ago that food insecurity is primarily a distribution problem. If that remains true, all it should take to make the FAO slogan a reality is political will. And, that of course is the catch. In our globalized economy, food is a commodity available to the highest bidder. If that high bidder wants to turn food into biofuel rather than feed it to those in need, so be it.
The real world consequences of this approach are ugly; and they are only going to get worse! In many low-income countries, food expenditures already average over 50% of income. Higher prices mean that more people will be undernourished. This hunger map compiled by FAOSTAT shows how high the percentages of food insecurity already are.
In the poorest countries, more than half the population is undernourished! The UN Millennium Development Goals set a target of halving the number of people suffering hunger by 2015. It is important to read the FAO/OECD Report with these Millenium Goals in mind.
There are relatively easy steps that could take us closer to the Millenium Goals. For example, the FAO/OECD Report calls biofuel demand

the largest source of new demand in decades and a strong factor underpinning the upward shift in agricultural commodity prices.


Characterizing the energy, environmental and economic benefits of biofuels made from agricultural commodities as "at best modest, and sometimes even negative,” the Report recommends considering alternative approaches that offer potentially greater benefits with less of the unintended market impact.
Food prices and the global economy will be one of the issues addressed at the June 4-5 OECD Ministerial Council Meeting in Paris. FAO is holding a separate High-Level food crisis summit in Rome on June 3-5. Let's hope that they focus more on feeding those in need, and less on boosting nascent biofuel industries.

1 comment:

Diane Marie Amann said...

Thanks for the great post, Rebecca! Coincidentally, Amartya Sen published an op-ed on this subject in Wednesday's New York Times. Entitled "The Rich Get Hungrier," it's available at http://www.nytimes.com/2008/05/28/opinion/28sen.html?_r=1&scp=2&sq=amartya+sen&st=nyt&oref=login.