Leo Lewis, Asia Business Correspondent
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When it comes to the food crisis, it is not difficult to cast biofuels as the villain of the piece: biofuels are new, the food crisis is new and the two seem connected intimately.
Even villains can serve a purpose. In this case, biofuels have been a barium meal for the globalised economy, exposing the astonishing fragility of food and energy supply so that the correct treatment can be applied.
By giving food a starring role in the energy debate, biofuels have revealed the lengths to which we will go to drive our cars cheaply. If food riots are the grim outcome of that new role, biofuels have rung an important alarm over the sustainability of the internal combustion engine.
Perhaps even more usefully, biofuels have demonstrated that science is properly engaged with the looming energy crisis. Even if this technology has backfired, it is probably better that there are experiments with alternative fuels than none at all.
Until 18 months ago most of us had never heard of biofuels and were certainly not concerned about food shortages or crippling inflation. Then we learnt that farmers from Idaho to Indonesia were selling their crops to biofuel processors and within a few short months food riots were breaking out in Haiti and the Philippines. The stomachs of the poor were supposedly losing out to the cars of the wealthy.
To make matters worse, there were scientists on hand to deliver the coup de grace - by confirming that biofuels were neither energy-efficient nor particularly clean in terms of carbon emissions.
There are plenty of sound technical and market-specific reasons to curse biofuels for food-price volatility. The decision of farmers in the US and elsewhere to start growing crops destined for fuel tanks - a decision helped enormously by hefty subsidies – has skewed crazily dozens of markets around the world. Commodity traders in Hong Kong, London and Chicago say that what used to be relatively straightforward markets are now on “hair triggers” and in thrall to dozens of new factors, many related to the new dynamics of biofuels.
Wheat output has suffered and world stocks have dwindled to 30-year lows. Fewer soya beans have been planted and the prices of other edible-oil crops have exploded. Cattle farms cannot compete with ethanol plants for the grain with which they would otherwise feed their cows, and milk prices have jumped.
And there was the sudden summer glut of strange anecdotes from across the globe: insane price rises for lager at the Munich Beer Festival; pasta protests in southern Italy; butter droughts in Japan; panic buying of cooking oil before the big religious feasts in Malaysia - all with a seemingly direct link to the biofuel bogeyman.
The reality of biofuels may be different and darker. They have sounded a deafening klaxon over the global food system, revealing weaknesses that turn out to have riddled the food production business for many years.
Long-established and heavy reliance on fertilisers has left farmers with a disproportionate burden of rising crude oil and chemical prices - enough to wipe out the profits of higher market food prices. Aggressive tariffs and protectionism must now come under the microscope. The sheer speed with which farmers have rotated crops towards biofuels speaks of a desperation and economic hardship that might not have emerged for years without the biofuel experiment.
Without it the world might have muddled on for another decade before it realised that its food system was dysfunctional and imbalanced. It might not have noticed until too late that Thai paddy fields were grossly inefficient or that Indian irrigation systems were in need of massive investment.
The world has seen that the same vast political and financial capital that has historically been poured into securing energy resources must now be poured into food.
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The increases in food prices based on the costs of corn and soybeans represent less than 5 percent. Oil-related costs, including farmer's costs, and food production, distribution, and transportation costs, are probably 50-75 percent.
Mike, Sioux City, Iowa , USA
What about the impact of fossil fuels on food prices.?!
Crude oil and diesel prices are on the increase
Tractors, harvesters, trucks, ships are needed to produce and transport food and they all run on diesel
How much of the food price is determined by fossil fuels?!
Eelco Dekker, Maastricht, The Netherlands