Friday, June 06, 2008

UN Food Summit - Food for Vehicles or People?

Source: Financial Times

Emotions ran high at the United Nation’s food summit in Rome this week. The summit was the first held to specifically address the significant rise in food prices over the last two years. Jacques Diouf, director-general of the UN’s Food and Agriculture Organization, charged biofuel producers with causing, in significant part, the food crisis. Biofuel is used to produce ethanol as an alternative to fossil-based fuels using the energy contained in crops like sugarcane and corn. Thus valuable land and crops are being diverted from human consumption to fuel production.

At the summit, Diouf asserted that “nobody understands how $11bn to $12bn a year on subsidies and protective tariff policies had the effect of diverting 100m tons of cereals from human consumption, mostly to satisfy a thirst to fuel vehicles.” He further added, “nobody understands how the rich countries have created a distortion of the world market with the $272bn spent on supporting their agriculture.” The director-general found it difficult to understand why these rich countries with abundant financial and agricultural resources could not provide the $30bn per year to feed the 862m hungry people across the globe.

These emotional humanitarian charges put the “rich countries” on the defensive with respect to their biofuel priorities. The U.S., Brazil and the E.U. lead the world in biofuel development and claim that biofuels are not the reason behind the food crisis. Ed Shafer, the U.S. agricultural secretary, claims that biofuels are only responsible for three percent of the inflation of food prices. Other estimates range as high as thirty to sixty percent. While biofuels clearly play some role in the food crisis, Brazil’s president, Luiz Inacio Lula da Silva, attributes most of the price increase to oil prices, climate changes, and growing consumption, among other things.

Already, France and the U.K. are considering altering their biofuel policies in accordance with Diouf’s humanitarian concerns, while the U.S. and Brazil defend their policies.
1. Is this an all or nothing battle?
2. Will the UN will be able to develop a plan to balance biofuel production endeavors with stable food prices?
3. Could the summit mark an end, perhaps only temporary, to biofuel development?

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