The other global crisis: rush to biofuels is driving up price of food

By Paul Vallely
Saturday, 12 April 2008

The world's most powerful finance ministers and 
central bankers are meeting in Washington 
tomorrow; but as they preoccupy themselves with 
the global credit crunch, another crisis, far 
more grave, is facing the world's poorest people.

A dramatic rise in the worldwide cost of food is 
provoking riots throughout the Third World where 
millions more of the world's most vulnerable 
people are facing starvation as food shortages 
grow and cereal prices soar. It threatens to 
become the biggest crisis of the 21st century.

This week crowds of hungry demonstrators in Haiti 
stormed the presidential palace in the capital, 
Port-au-Prince, in protests over food prices. And 
a crisis gripped the Philippines as massive 
queues formed to buy rice from government stocks.

There have been riots in Niger, Senegal, Cameroon 
and Burkina Faso and protests in Mauritania, 
Ivory Coast, Egypt and Morocco. Mexico has had 
"tortilla riots" and, in Yemen, children have 
marched to draw attention to their hunger.

The global price of wheat has risen by 130 per 
cent in the past year. Rice has rocketed by 74 
per cent in the same period. It went up by more 
than 10 per cent in a single day last Friday - to 
an all-time high as African and Asian importers 
competed for the diminishing supply on 
international markets in an attempt to head off 
the mounting social unrest. The International 
Rice Research Institute warned yesterday that 
prices will keep going up.

The buffers stocks of staple foods that 
governments once held are being steadily 

Rising prices have triggered a food crisis in 36 
countries, says the UN Food and Agriculture 
Organisation. The hike in prices means the World 
Food Programme is cutting food handout rations to 
some 73 million people in 78 countries. The 
threat of malnutrition on a massive scale is 

The impact is beginning to be felt in the rich 
world, too. More expensive wheat has caused large 
rises in the cost of pasta and bread in Italy 
where consumer groups staged a one-day strike 
that brought pasta consumption down 5 per cent. 
The price of miso, a fermented rice and barley 
mixture, is up in Japan. France and Australia 
have launched national inquiries into rising food 
prices and are pressing food producers and 
supermarkets to absorb price rises. In Britain, 
the price of bread is rising in line with the 
cost of wheat.

Governments have begun to negotiate secretive 
barter arrangements as the price of agricultural 
commodities leap to record highs. Ukraine and 
Libya are close to a deal on wheat. Egypt and 
Syria have signed a rice-for-wheat swap. The 
Philippines has just failed in a rice deal with 

All across the world, cereals, meat, eggs and 
dairy products are becoming dearer. "Food prices 
are now rising at rates that few of us can ever 
have seen before in our lifetimes," said John 
Powell of the World Food Programme. Prices are 
likely to remain high for at least 10 years, the 
Food and Agriculture Organisation is projecting.

A complex interaction of factors has provoked the 
panic among dealers in international food markets.

Diets are changing radically in nations such as 
China, India, Brazil and Russia, where economic 
growth has boosted meat consumption. In China, it 
is up by 150 per cent since 1980. In India, it 
has risen by 40 per cent in the past 15 years. 
The demand for meat from across all developing 
countries has doubled since 1980.

Because cattle and chickens are fed on corn - it 
takes 8kg of grain to produce 1kg of beef - the 
price has risen.

The new market for biofuels has raised grain 
prices. Corn is being used to produce energy and 
the market is anticipating hugely increased 
production in the coming decade. George Bush 
wants 15 per cent of American cars to run on 
biofuels by 2017, which will mean trebling maize 
production. Europe has a set a transport fuels 
target of 5.75 per cent from biofuels by 2010. As 
a result, the price of corn has begun to track 
that of oil quite closely.

The soaring cost of oil, which last week topped 
$105 (£53) a barrel for the first time, has 
another impact. It increases the price of 
fertiliser, and also the costs of food processing 
and transport.

Climate change is taking its toll. Droughts and floods are affecting harvests.

Floods in central China this year displaced 
millions of people and devastated rice and corn 
crops. Overall China's grain harvest has fallen 
by 10 per cent over the past seven years. Last 
year, Australia experienced its worst drought for 
more than a century, causing the wheat harvest to 
fall by 60 per cent. The UK wheat harvest is 
expected to be 10 per cent down this year, partly 
because of the flooding.

Worldwide, an area of fertile soil the size of 
Ukraine is lost every year because of drought, 
deforestation and climate instability.

There is also increasing demand from a rising 
world population which is expected to grow from 
6.2 billion today to 9.5 billion by 2050. The 
World Bank predicts global demand for food will 
double by 2030.

Government policies do not help: the rich world 
subsidises agriculture not to feed the world but 
to enrich its farmers.

There is an increasing recognition of the gravity 
of all of this among the leaders of the 
industrialised world. On Thursday, Gordon Brown 
called on the Japanese Prime Minister, Yasuo 
Fukuda, the current chairman of the G8, to devise 
an international plan to deal with rising food 
prices with the World Bank, the IMF and the UN.

There is increasing concern about the rush to 
biofuels. Britain's new chief scientist, 
Professor John Beddington, has said cutting down 
rainforest to produce biofuel crops was 
"profoundly stupid". It was, he said, "very hard 
to imagine how we can see a world growing enough 
crops to produce renewable energy and, at the 
same time, meet the enormous increase in the 
demand for food".

Lennart Båge, the president of the UN's 
International Fund for Agricultural Development, 
suggested that those opposed to GM crops should 
take another look at the productivity gains they 
can unleash and bring changes as massive as the 
"green revolution" of the 1960s, when crop yields 
in India and other developing nations jumped 
because of of better seeds, fertilisers and 
improved irrigation.

That change brought down food prices, freeing 
millions from hunger. If world leaders cannot 
come up with something similar again, the food 
riots could spread across the globe.