Biofuels 'aggravating' food prices says Brown

10.04.08 @ 17:39

  1. By Leigh Phillips

UK Prime Minister Gordon Brown has written to fellow G8 leaders about his concerns that the rush towards biofuels to replace fossil fuels such as petroleum is "aggravating" global demand for food.

  • UK PM Brown (l) says there is a 'growing consensus' that biofuels should be investigated for their impact on food prices (Photo: European Community)

In a letter sent to Japanese Prime Minister Yasuo Fukuda on Wednesday (9 April), Mr Brown wrote: "There is growing consensus that we need urgently to examine the impact on food prices of different kinds and production methods of biofuels, and ensure that their use is responsible and sustainable."

The British prime minister wrote that he is concerned that the rapid rise in food prices has lead to a wave of riots in the developing world in recent weeks. His letter was also sent to UN Secretary General Ban Ki Moon, the head of the IMF and the head of the World Bank.

The town of Hokkaido, Japan is set to host the 2008 G8 meeting in July, where the British prime minister wants his fellow G8 leaders to put together a package to deal with food security.

"Increased wealth and growing populations in developing countries contribute to steadily increasing global demand for grains, for food and animal feed, aggravated by rapidly increasing biofuel production," says the UK letter.

Specifically, Mr Brown suggested that the UN, the World Bank and the International Monetary Fund work together around the areas of trade, production, technology, financial initiatives and food aid.

"Rising food prices threaten to roll back progress we have made in recent years on development. For the first time in decades, the number of people facing hunger is growing," he said.

Meanwhile, on the same day, the president of the European Commission refused to concede that the growth in biofuel production, still less EU support for the alternative fuel source, had any effect on food prices.

"The reasons for the price increases at the global level are very complex," said President Jose Manuel Barroso, speaking to reporters, "but the impact of biofuels is not significant."

Rather, argued the president, the crisis in food prices is being caused primarily by export restrictions on grains by Ukraine and Russia – two of the biggest cereal producers in the world.

EU leaders in Spring last year agreed that the EU should increase the use of biofuels in transport fuel to 10 percent by 2020, up from a planned 5.75 percent target to be achieved by 2010.

World Bank issues biofuel concerns

But the commission's position on biofuels is growing increasingly isolated. The latest international bodies to issue concerns about the effects of the alternative energy source are the World Bank, the FAO and the India-Africa Forum.

On Wednesday, the World Bank issued a policy note that stated: "Increased biofuel production has contributed to the rise in food prices."

The Bank says that other possible causes for the rise in food prices that have been considered, such as droughts in Australia and poor crops in the EU and Ukraine in 2006 and 2007, were largely offset by good crops and increased exports in other countries and would not, on their own, have had a significant impact on prices.

Only a relatively small share of the increase in food production prices (around 15 percent) is due directly to higher energy and fertiliser costs, says the report.

Also on Wednesday, the head of the United Nations Food and Agriculture Organization (FAO), Jaques Diouf, warned the food riots could spread and spoke of an "emergency."

Adding to the chorus of voices speaking out against biofuels, Indian and African leaders at the first ever India-Africa summit yesterday called on Western countries to reconsider their support for biofuels.

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