World Bank

Do biofuel mandates and subsidies inflate food prices? Do they increase world hunger ? There was a rip-roaring debate on the food security impacts of biofuel policies in 2007-2008, when sharp spikes in wheat, corn, and rice prices imperiled an estimated 100 million people in developing countries. Food price riots broke out in Bangladesh, Burkina Faso, Cameroon, Ivory Coast, Egypt, Indonesia, Mexico, Mozambique, Senegal, Somalia, and Yemen.

Experts attributed the rapid rise in food prices to several factors including high petroleum prices, drought in Australia, a weak U.S. dollar, commodity speculation, and rising demand for grain-fed meat by China’s rapidly expanding middle class. But some also laid part of the blame on biofuel policies, which artificially increase global demand for corn and soy while diverting those crops and farmland from food to fuel production. A July 2008 World Bank report argued that biofuel policies accounted for as much as two-thirds of the 2007-2008 price spike. A July 2010 World Bank report, on the other hand, concluded that rising petroleum prices were the dominant factor. “Biofuels played some role too, but much less than previously thought,” the report stated.

Where does the debate stand today? Recent reports by the National Research Council (NRC), the New England Complex Systems Institute (CSI), the UN Committee on World Food Security (CWFS), and Iowa State University (ISU) all acknowledge that biofuel policies put upward pressure on food and feed prices. The NRC and ISU studies argue that U.S. biofuel policies have only modest impacts on grain prices whereas the CSI and CWFS studies indicate that biofuel policies contributed significantly to the 2008 global food crisis and/or pose significant risks to global food security today.

Links to these reports and key excerpts follow. [click to continue…]