NCPA - National Center for Policy Analysis


April 22, 2008

Poverty, famine and violence are among the supposed products of global warming in the future.  Yet these calamities are with us today thanks to a key element of "green" policy, biofuels.  This feel-good measure is becoming a real world disaster, says the Wall Street Journal.

For instance:

  • The prices of wheat and rice this year will have doubled since 2004, according to World Bank projections.
  • Soybeans, sugar, soybean oil and corn are expected to be 56 percent to 79 percent costlier than in 2004.
  • The bulk of the increases have come in the past year and can be attributed to the West's push to turn these crops into fossil-fuel replacements like ethanol.
  • Food prices will likely remain overinflated until at least 2015.

The result of these rising prices is that 100 million people could slip back into poverty, erasing seven years' worth of gains, warns Bank President Robert Zoellick.  Food inflation and shortages have sparked riots from Egypt to the Philippines, and six people were killed in Haiti alone during nine days of related unrest there this month.

Soaring oil prices and costlier fertilizer account for only 15 percent of the rise in food prices, according to the World Bank.  The Bank notes that "almost all" of the increased growing of one of the key crops, corn, went for biofuels production in the United States.

It's no coincidence that the United States and the European Union (EU), which are leading the biofuel charge, both have powerful agriculture lobbies. U.S. and EU promotion of biofuels represent a trifecta of bad regulation, says the Journal:

  • Arbitrary production targets to juice demand,
  • Subsidies that encourage inefficient use of crops as fuel rather than food,
  • And tariffs that stifle foreign competition.

If only Third World consumers had the same influence as rich-world farmers, says the Journal.

Source: Editorial, "Bio-Foolishness," Wall Street Journal, April 21, 2008.

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