Among the many good things that the European Union is doing to coordinate Europe’s efforts to tackle climate change is its biofuels strategy. Last Monday, European Commission agriculture spokesman Michael Mann reassured us all that meeting the EU’s ambitious target to produce 10 per cent of all vehicle fuel from plant matter by 2020 would not lead to European food shortages. Phew! So we can all start growing lucrative biofuels and just buy all our food from the rest of the world, right? Not so fast.
A number of pieces of research into biofuels have recently found that they may not represent a climate change magic bullet, and in some cases can result in more emissions than fossil fuels. But there’s a much more pressing reason why the EU needs to rethink its bio-fuels strategy – one that has nothing to do with global warming.
There aren’t many more important issues than climate change, but rising food prices is one. Over the past three years global wheat prices have risen by 181 per cent, according to a recent World Bank report. In the global market for food, agriculture policies in one part of the world can have unintended and devastating effects in others. And this problem is more immediate, unjust and avoidable than the problem to which biofuels are claimed to be the answer.
While growing affluence in some developing countries drives increased global demand for food, distortionary, state-sponsored inducements to grow biofuel crops push world food supply down. As a result, biofuel policies are driving food prices higher worldwide. Big deal: that’s a small price to pay for saving the planet, right? In rich countries, where food costs comprise between 10 and 20 per cent of consumption, maybe. But in some developing countries food represents up to 80 per cent of total consumption, so higher food prices bite hardest on those who already have the least to eat. Behind those policy-driven price rises, then, lies a dangerous dynamic that leaves some the world’s poorest people to go hungry. Nowhere was that better illustrated than in the famine that occurred in West Africa in 2005.
Three years ago Mali and Niger suffered a poor harvest owing to a combination of drought conditions and a plague of locusts. But much poorer harvests in previous years had no such calamitous human cost: in 2000-01, a year without famine, the grain harvests in Mali were 22 per cent lower than those in the famine year of 2004-05. The real trigger for the 2005 crisis had more to do with economics than agriculture, and understanding why so many starved shows why European biofuels policy risks repeating the same mistake.
According to the UN’s Food and Agriculture Organisation, what really triggered the famine was the protectionist policies in neighbouring Nigeria to nurture its domestic rice and wheat production. Import controls drove up the price of domestic wheat and rice causing Nigerians to switch to cheaper foodstuffs of maize and sorghum. Higher demand for those cheaper crops bid up their regional price by as much as 60 per cent making them too expensive for the people of Mali and Niger, for whom these foods formed the staple diet. So while Nigeria’s policies didn’t lead to food shortages in Nigeria, they certainly led to food shortages in Niger and Mali. As a result, millions suffered malnutrition and many thousands of people starved to death.
The same dynamic is now playing itself out on a much larger scale thanks to rich-world ‘green’ policies. As government-imposed biofuels targets encourage substitution of biofuel crops for food, world food prices are rising and will continue to face upward pressure unless these targets are dropped. As the Indian finance minister put it last week ‘in a world where there is hunger and poverty, there is no justification for diverting food crops towards biofuels.’ Last week, as an ominous harbinger of what may be to come, food riots in Haiti left five people dead and hundreds injured. More unrest is anticipated elsewhere.
So the EU needs to think again about the unintended consequences of its biofuels targets. Rather than encouraging substitution for biofuel crops, governments should, if anything, be deterring the use of arable land for energy production to keep food prices low. If they continue to champion biofuels as the solution to global warming, rich countries’ governments will impose the real cost of their distortionary policies, not on their own citizens, but on the poorest people in the world. In our attempts to save the rich world from fire and flood it won’t do to risk famine among those countries that did nothing to get us into this mess.