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June 08, 2008

Western farm subsidies to blame for food crisis, not Brazilian biofuels

by Conor Foley

Brazil's President Lula strongly defended his government's biofuels programme at the UN Food and Agricultural Organisation conference in Rome last week. Since his remarks run directly counter to the Guardian's call to "use this summit to press the case for stopping biofuel production" in certain circumstances and it is worth elaborating why liberals in the north are taxing the patience of progressives in the south on this issue.

Brazilian ethanol, unlike its incredibly inefficient North American competitor, has had no demonstrable impact on the recent increase in food prices, as the relative stability of world sugar prices shows. Nor is the industry a direct threat to the Amazon rainforest. As Lula pointed out, "Our sugar plantations are 2,000km away from our rainforest. That is the distance from the Vatican to the Kremlin." Currently only about 1% of Brazil's arable land is given over to the production of biofuels and, while there are legitimate concerns that a rapid expansion of the industry could displace other crops, the Brazilian government is actually trying to regulate both the industry and working conditions within it.

"Ethanol is like cholesterol," Lula told the conference. "Good ethanol helps to tackle the pollution of the planet and is competitive. Bad ethanol depends on the fat of subsidies." He directly attacked the production of biofuels from maize and other forms of crop substitution by western farmers. He also said that he was "astonished, indignant and devastated" by the lobbying efforts of agro-business and the petroleum industry to keep their tariffs and subsidies, which are costing countries like Brazil dear in lost exports. "The fingers pointing at us with indignation are soiled with oil and charcoal." He argued that the only way of tackling the food crisis is to increase food supply and that some of the biggest obstacles to this are the protectionist policies of the rich world. The world would not be facing a food crisis, according to Lula, "if developing countries had been stimulated in a free-market context."

There is no doubt that one of the reasons for the sudden rise in food prices has been the decision by many farmers in Europe and North America to switch production to growing cereals which can be converted to biofuels. As Chris Goodall has pointed out, about 100m tonnes of maize from this year's US crop will be diverted into ethanol refineries, which means one in 20 of all cereal grains produced in the world this year will end up in the petrol tank of US cars. This is an increase of a third on 2007's figure and has obviously had a knock-on effect on the supply chain. Rising oil prices have also increased the production and shipping costs of food – as well as providing farmers with a greater incentive to produce for this market.

The second reason, it is generally accepted, why prices have risen, is that people in Asia and Latin America are eating more meat, which is a consequence of rising living standards. However, the Malthusian view that links rising food prices directly to population growth is not supported by the facts, since the price spike has occurred while rate of increase of the world's population is currently slowing. Those who argue that there are simply too many people on the planet, also need to explain what they propose to do about it. Fortunately, there is a clear link between rising incomes and decreasing birth rates,which should eventually stabilise population growth. The far bigger problem is not that there may come a time in the future when there is not enough food to feed everyone, but the fact that every single year at the moment around 3.5 million children lose their lives as a direct result of malnutrition.

The point Lula has made repeatedly when defending Brazil's biofuels programme is that: "The problem with world hunger is not a shortage of food but a shortage of income." He called for a "radical change in ways of thinking and acting" about food production to "increase food supply, open up markets and wipe out subsidies." He also said that the "cutting-edge technology" which Brazil has developed to "bring together the earth, sun and labour" in a "golden revolution" could be exported to Africa to help tackle poverty as well as global warming and food and energy shortages.

As Kevin Watkins has argued, The US government is currently spending $7bn a year in subsidizing maize-based biofuels, which has been a huge boost to American agro-business but has had zero benefits for reduced carbon emissions. France alone received a subsidy of $12bn for the European Union's notorious Common Agricultural Policy last year, and the average European cow receives more financial support than half the world's population has to live on. This money could instead be used far more efficiently to increase food production by strengthening the development of agriculture in the south. Instead it is often used for precisely the opposite purpose. One of the reasons why so many of the world's poorest countries remain both poor and particularly vulnerable to sudden food price rises is that the dumping of food by Europe and North America has wiped out many local markets.

This is the key issue in the debate, which some liberals and environmentalists in the rich world seem either not to have fully grasped or simply want to ignore. The World Trade Organisation is not the main enemy. Indeed it is difficult to see how the issue can be tackled without an agreement, which in reality can only be achieved through the WTO, that stops rich countries dumping surpluses, opens up their agricultural markets and supports the development of agriculture in poor countries. You do not show solidarity with poor people by supporting policies which keep them in poverty and it is obscene to pretend otherwise.

The Guardian

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