Don't biofuel yourself

4 June 2008 By Martin Hutchinson

Schemes like the US cornbased ethanol programme are a convenient scapegoat for higher world food prices. However, protectionism in both rich and poor countries and excessive global money creation are more important factors.

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Jacques Diouf, DirectorGeneral of the Food and Agriculture Organization, denounced biofuel subsidies on June 3, saying: Nobody understands how $1112bn a year on subsidies and protective tariff policies had the effect of diverting 100m tonnes of cereals from human consumption, mostly to satisfy a thirst for vehicle fuel.

The FAO Outlook for 200817 expects food prices to drop from their current highs, and then to resume their previous trend of gradual decline in real terms because of productivity gains in the agricultural sector. Biofuel demand is the largest source of new demand in decades.

US corn production has increased from 10,081m bushels in the year to August 2003 to an estimated 12,125m bushels in the year to August 2008. Corn exports have increased in the same period from 1,900m bushels to an estimated 2,100m bushels in the same period.

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