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May 08, 2008

Biofuel crops unfairly blamed for soaring global food prices

The European Union's senior agriculture official defended the bloc's push for biofuels on May 6 and said biofuel crops are being unfairly blamed for soaring food prices around the world.

Mariann Fischer Boel, the EU's commissioner for agriculture, said other, larger factors were behind the price increases, which have triggered public unrest, especially in Asia and Africa.

The production of biofuel crops such as canola, corn, soybeans and sugarcane has led to the deforestation and a reduction of land available for growing crops for food. That has led many experts to blame such crops for contributing to the price rises.

British Prime Minister Gordon Brown is among those who have called for a re-examination of the push for biofuels, which have been promoted as a way to reduce pollution and fight global warming.

Fischer Boel, speaking at a biofuels conference, said the issue was more complex and the concern over biofuel crops was overblown. She said bigger factors were at work, namely increased demand for meat and dairy products, particularly in China and India, which has reduced farmland for growing food crops. She also noted that bad weather in 2006 in North America, Russia, the 27-nation EU and in Australia last year led to less production.

Also — but harder to quantify — grain and other food commodity speculators have pushed up prices, she said. She said investments in commodity indexes that totaled US$10 billion in 1998 reached US$142 billion by 2007. In February alone, 140 commodity-based financial products were launched for investors, according to EU data. That is double the number issued each month in 2006 and 2007.

Fischer Boel said the "media storm" about higher food prices also ignores the fact that "in the long term, price rises ... could be good news for the 70 to 80 percent of the world's poorest who live in rural areas and depend on farming for their livelihood."

As it seeks to limit reliance on foreign energy sources, the European Commission, the EU's executive office, has set a target for biofuels to account for 10 percent of energy used by the transport sector by 2020. The transport sector accounts for more than 20 percent of the EU's greenhouse gas emissions.

The 10 percent biofuel target remains realistic, said Fischer Boel, and can be achieved in an environmentally sustainable way. She said the EU now uses less than 1 percent of its cereal production to make ethanol. Two-thirds of its canola production is for biodiesel but that production as a whole accounts for only 2 percent of global oil seed demand.

She painted a generally upbeat outlook for both biofuel prices and production.

Her views clash with those of Jeffrey Sachs, head of the Earth Institute at New York's Columbia University and a special UN adviser.

Speaking on May 6 at the European Parliament, he said the fact that a third of the US maize crop is used for fuel "is a huge blow to the world food supply." He acknowledged the U.S. biofuel program has had more impact on food shortages but that Europe's plans for more biofuel output will also start to bite.

Last month, top international food scientists recommended a halt in the use of food-based biofuels, such as ethanol, because they say it would cut corn prices by 20 percent during a world food crisis.


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