[Over the past year] the average price of corn has increased by some 60 per cent, soybeans by 76 per cent, wheat by 54 per cent, and rice by 104 per cent. These price increases are substantial threats to the welfare of consumers, especially in poor developing countries facing food deficits. They are especially burdensome to the rural landless and the urban poor, who produce no food at all. Josette Sheeran, the Executive Director of the World Food Program, calls this a global “tsunami of hunger.” Robert Zoellick, President of the World Bank, estimates that there are 100 million newly poor and hungry people as a result of rising food prices.Although controversy remains over how much of the food price increase since 2006 can be attributed to biofuels, their effects cannot be overlooked. In 2008, 30 per cent of the US corn crop will be used for ethanol. The supposedly “green” virtues of biofuels are not quite what they seemed. In fact, biofuels pose major risks to the environment. In October 2007, the Nobel Prize-winning chemist Paul Crutzen, who pioneered the atmospheric science of ozone depletion, co-authored an article demonstrating that the heavy application of nitrogen fertiliser on corn (for ethanol) and on European rapeseed (for vegetable-oil biodiesel) would produce such high levels of atmospheric nitrous oxide — which is 296 times more damaging as a greenhouse gas than carbon dioxide — that it would have a net negative effect on greenhouse gas emissions.The current biofuels craze is neither clean nor green. Instead, it has disrupted food and commodities markets and inflicted heavy penalties on poor consumers. These developments have occurred despite record global grain harvests in 2007. The policy response to these pressures, in both rich and poor countries, has not been encouraging. Rather than reducing the mandates, subsidies, and tariffs that buttress the ethanol industry, the US government has larded new agricultural legislation in Congress with further subsidies and shifted blame to other countries (or to economists). Trade restrictions [in developing countries] reduce the supply available on the world market and drive global prices of these grains even higher, aggravating global price instability. Excerpted from an article by C. Ford and B. Senauer in ‘Foreign Affairs’
