Don't Blame Biofuels

New government study finds that biofuel production is not a significant factor in the rise of food prices


Timing is everything. Last week I was reading about a new report released by the World Bank that claimed that biofuel production has caused world food prices to increase by 75 percent. This week I read about a new report released by the US Departments of Energy and Agriculture that insists that "the expansion in ethanol and biodiesel consumption is estimated to have increased the Consumer Price Index (CPI) for all food by 0.10-0.15 percentage point." How do we make sense of this disparity, and which numbers should we believe? I think you need to look at the sources of these two studies and consider their objectives. The World Bank provides economic and technical assistance to reduce poverty in developing countries. It has also been plagued with corruption scandals throughout most of its history, the most recent one involving Bush crony Paul Wolfowicz giving his girlfriend a cushy job with the bank and being forced to resign as chairman. My guess? The World Bank's study could easily have been influenced by players who want to keep biofuels from gaining any traction in the market. How else do you explain the striking contradiction in the findings in the report from the US Dept's of Energy and Agriculture? That study acknowledges that biofuel production does play a role in food prices, but goes on to say that other, global factors have a much greater impact on rising food prices. Those factors include worldwide droughts, population growth, the declining value of the dollar, and, ironically, high energy prices, which affect the cost of fertilizers and fuel for farming, and make it more expensive to get food to market. I don't claim to be an expert on any of this, but as a journalist I read a lot and I talk to a lot of people, and everything I hear from my sources lends weight to the findings of the US DOE/DOA study. Perhaps this study will settle the food vs. fuel debate, and we can move ahead with strategies that ensure both a steady, secure food supply and a healthy biofuel industry.