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June 05, 2011

Europe urged to abandon farm subsidies, lower biofuels targets to reduce world hunger

by Timothy Spence

With spiralling food prices threatening to leave millions more people hungry every year, European countries must abandon subsidies and higher production targets for biofuels, the anti-poverty group Oxfam warns.

Announcing a new campaign to ease global hunger, Oxfam is also urging the European Union to more closely regulate commodities trading and boost support for small-scale farming in developing countries.

Phil Bloomer, campaign director for Oxfam in Britain, says promoting fuel production at the expense of food output is an "obscene scandal" that has contributed to the spiralling cost of maize and other commodities. Food costs have risen steadily in recent months after hitting a 30-year peak in 2008.

"We’re calling on the European Union to end its mandate on biofuels, to make sure it is reorienting its development aid towards a greater level of concentration, and we’re asking them to really lead the world in addressing food price volatility and the transparency and regulation (of) the food market," Bloomer told IPS at the launch of Oxfam’s "Grow" campaign.

European leaders are already under pressure to rethink food and fuel policies. The European Commission, the EU’s executive, is weighing a review of the environmental effects of biofuels, and the European Parliament is expected this summer to consider rules that would strengthen financial oversight of commodities and derivatives trading. Commodity index funds grew in value from 11 billion euros in 2003 to 204 billion euros in 2008, according to Oxfam.

In a report accompanying its new campaign on food security, Oxfam urges the EU to revise its 2009 Renewable Energy Directive that calls for 10 percent of transport fuels to be derived from plants by 2020, doubling current consumption. The policy also sets targets of 20 percent renewable energy and, by mid-century, cutting domestic greenhouse gas emissions by 80 percent from their 1990 levels.

Oxfam’s "Growing a Better Future" report contends that Europe's "flawed" biofuel incentives drive up commodity prices by shifting production away from food crops. Biofuels incentives, meanwhile, are compelling companies to look for cheap land and labour in developing countries for export to Europe, adding to the farming competition in nations most in need of food, the report says.

The recommendations are aimed at the EU, the world’s largest aid donor and the global leader in climate-change policies. But Oxfam also urges the United States, where some 40 percent of the maize crop now goes to the production of fuels and fuel additives, to end its subsidies.

Oxfam predicts that without policy changes, the price of maize and other staple foods will more than double in 20 years as production declines. Since 2008, when food prices hit a 30-year high, 100 million people have been thrust into poverty partly because of high food costs. In East Africa alone, eight million people face food shortages today and that number is projected to double in ten years. Globally, 925 million people go hungry.

Annual biofuels subsidies hit 20 billion dollars worldwide in 2010 - 3 billion euros (4.3 billion dollars) in Europe and as much as 7.3 billion dollars in the United States, according to the Geneva-based Global Subsidies Initiative. In contrast, total agricultural development aid was 9.8 billion dollars in 2010.

In addition to throwing out biofuels subsidies and production targets, Oxfam also urges the EU to boost agricultural aid to small landholders in developing countries and expand on an EU programme launched following the 2008 food supply crisis. The EU’s Food Facility has provided 1 billion euros over three years to boost production and expand financing, infrastructure and storage capacity to support small farmsteads in needy countries.

Klaus Rudischauser, an EU development official, told a news briefing in advance of high-level meetings this week between EU and African Union officials that agricultural support in Africa is a priority, especially in light of high current food costs.

Three years after commodity prices hit a 30-year high, the UN Food and Agriculture Organisation (FAO) reported in May that prices of wheat and maize continued to rise although costs of other staples, including rice, were stabilising for the first time in months. Maize and wheat prices are up 30 percent this year in parts of Africa.

Rising food costs have replaced the economy as the main concern among consumers, according to a recent survey by the Nielsen research firm. The online poll of 28,000 people in 51 countries, conducted Mar. 23 to Apr. 12, showed that the cost of food surpassed worries about economic stability, fuel prices and utility costs. The survey had a margin of error of 0.6 percent.

But some analysts downplay the link between biofuel production and food costs. A World Bank analysis says financial market speculation on commodities coupled with adverse weather and export restrictions in some countries had more to do with spiralling food prices in 2008 than production of plant-based fuels. The July 2010 analysis was written by two economists from the World Bank and European Commission.

Meanwhile, the thirst for biofuels grows. European production of transport biofuels rose fivefold between 2004 and 2008, according to the EU statistical office. The Intergovernmental Panel on Climate Change (IPCC) and the environmental group WWF in early May issued separate reports advocating huge investments in biofuels and other alternatives over the next 40 years.

IPCC officials estimate forecast that renewables could provide 77 percent of the projected global energy demand by mid-century. The WWF report says 100 percent of energy needs could come from winds, solar, biofuels and other alternative sources by 2050 with ample subsidies for renewable energy and more stringent efficiency standards.

"With consistent climate and energy policy support, renewable energy sources can contribute substantially to human well-being by sustainably supplying energy and stabilising the climate," said Ottmar Edenhofer, co-chairman of the IPCC working group that released its report in Abu Dhabi on May 9.


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