Monday, June 27, 2011

Land for Biofuels or Crops? The Debate Rumbles on

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Palm oil fruit – often seen as a biofuel.

Agriculture ministers for the world’s richest nations are meeting in Paris this week to debate the best ways to tackle unprecedented volatility in food prices.

But while farming officials for the Group of 20 nations may agree that markets need more transparency and predictability, opinion is still split over more controversial topics, including governments’ policies on diverting food crops to create biofuels.

A report commissioned by international agencies including the World Bank and the United Nations’ food body and the International Monetary Fund urged the G20 to “remove . . . policies that subsidize or mandate biofuels production or consumption”.

But opposition from countries such as the U.S. and Brazil, two of the world’s biggest users of first-generation ethanol created from corn and sugar for transport fuel, means such recommendations are not expected to be adopted by European governments.

“I suspect that there will continue to be differences among the G20 agricultural producers about how much they’re willing to commit to on biofuels,” said World Bank Group President Robert B. Zoellick.

Agriculture ministers are expected to announce plans to launch a global database of production and stocks of staple foodstuffs such as wheat, corn, rice and soya beans, similar to a system which already exists in oil markets. Observers hope this will reduce price volatility and allow governments to plan ahead to stop food shortages.

But for anti-biofuels campaigners, addressing the diversion of already stretched agricultural resources to create fuel is a key aspect of dampening food prices, which rose to record highs this year, according to the UN.

“As more food stocks go into gas tanks, not stomachs, you have higher prices,” said Sarah Best, Oxfam’s policy adviser of low carbon development. “The G20 has got to get a grip on the relationship between biofuels and food price volatility.”

She argues that scrapping mandates on biofuels blends, as are being imposed in the European Union, and blending subsidies, as exist in the U.S., will be key to ensuring food production rises by the 70% the UN projects will be necessary to feed a world population of more than 9 billion by 2050.

Yet the Paris-based Organization for Economic Cooperation and Development and the UN’s Food and Agriculture Organization, said in a report published last week they expect biofuels to absorb 13% of global coarse grain production, 15% of vegetable oil and some 30% of sugar by 2020—an increase in all cases from the previous decade.

Supporters of biofuels argue they can actually help to stimulate food production by boosting agricultural investment and will be key to meeting targets for cutting carbon emissions for the future.

They point to other problems like building up world food stocks and reining in speculation in commodities markets—issues which are also expected to be pushed to the sidelines this week—as more important for improving food security.

“It may be vogue for certain groups to blame biofuels for global hunger issues…but that doesn’t mean eliminating biofuels policies will somehow put more food on the plates in developing nations,” said Geoff Cooper, vice president for research and analysis of the Renewable Fuels Association.

Certainly, a vote by the U.S. senate last week to eliminate a 45-cents-per-gallon tax credit for blended biofuel and regular fuel and a 54-cents-per-gallon import tariff on ethanol, points to changing attitudes towards stimulating biofuels production in one of the world’s largest users.

Still, for campaigners who have been expecting robust targets to come out of this week’s meeting, the dropping of biofuels from the G20 agenda will be another sign of government inertia in the face of the most pressing humanitarian challenge of our time.

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