Biofuels main culprit for high food prices: World Bank

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According to the report published Friday, July4, which is based on an analysis by Don Mitchell, a top economist at World Bank, biofuels have pushed up food prices by 75 percent, an assessment in stark contrast with the US Government's claim that biofuels have contributed to less than 3 percent of food price increases.

The World Bank's report agrees with a report titled Agricultural Outlook 2008-2017, jointly published by the United Nations Food and Agriculture Organization (FAO) and Organization for Economic Cooperation and Development (OECD) which warned that growing demand for food crop for biofuels production (in the US and Europe) will push food prices up and keep them "at higher average levels than in the past and reduce the long-term decline in real terms."

According to data collected by FAO, the usage of corn in the US to make biofuels increased two-and-a-half times between 2000 and 2006.

Developed economies in the West are increasingly diverting food crops such as grains, oilseed products, corn and sugar for the manufacture of biofuels, which are seen as the environmentally-friendly solution to global warming and rising fuel prices.

Earlier, Bush had linked high food prices to high oil prices, grain speculators and increase in consumption in India and China but the World Bank report claims otherwise.

"Rapid income growth in developing countries has not led to large increases in global grain consumption and was not a major factor responsible for the large price increases," the report said.

Successive droughts in Australia, however, had only a marginal impact, the report said.

"Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate," it said.

According to the World Bank report, the basket of food prices examined in the study rose by 140 percent between 2002 and February 2008 and while higher energy and fertilizer prices accounted for an increase of only 15 percent, biofuels have been responsible for a 75 percent jump over that period.

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