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Secret world bank report

Millions go hungry to feed biofuel biz

Published Jul 9, 2008 11:18 PM

At a time of increased hunger worldwide, a confidential World Bank report has revealed that the overwhelmingly largest factor in rising food prices is the production of ethanol for fuel production.

More than a third of the corn produced in the U.S. and about half of the vegetable oils in the European Union are now used to produce biofuel instead of food.

Rising food costs have affected workers around the world. Rebellions over the cost of food have taken place in no less than 15 countries. The head of the World Bank has stated that as many as 100 million people may be pushed into poverty and hunger as a result of the price increases.

The secret report, leaked to the British Guardian, asserts that a whopping 75 percent of the rise in global food prices can be attributed to biofuel production. “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 states. The Guardian described the assessment as “the most detailed analysis of the crisis so far, carried out by an internationally respected economist at the global financial body.” (July 4)

In another Guardian article, Benjamin Senauer, a professor of applied economics at the University of Minnesota, calculates the consequences of ethanol production using more modest figures from the International Food Policy Research Institute. “We can combine IFPRI’s estimate that biofuels account for 30 percent of the rise in grain prices and the World Bank president’s figure of 100 million more hungry people due to higher food prices. This combination suggests that biofuels are responsible for 30 million more people going hungry in the world. ... If the leaked World Bank figures are more accurate, then that figure could be even higher.” (July 4)

The report was leaked to the press as leaders of the Group of 8 industrialized countries were preparing to meet in Hokkaido, Japan, where a major focus was biofuel production.

Senior development sources told the Guardian they believed the report had not been officially released to avoid embarrassing the Bush administration—which has claimed that biofuels contribute to less than 3 percent of the price increases, and has attempted to link higher food prices to increased demand in India and China.

Fidel was right!

Early on in the push for ethanol use in the U.S., Fidel Castro, Cuba’s revolutionary leader and at that time president, condemned the “sinister idea of turning foodstuffs into fuel.” Predicting the situation now at hand, Castro stated: “Let this formula be applied to the Third World countries, and the world will see how many hungry people on this planet will cease to consume corn. What is worse, let the poor countries receive some financing to produce ethanol from corn or any other foodstuff and very soon not a single tree will be left standing to protect humanity from climate change.”

The use of ethanol has served as a convenient ruse for politicians, auto corporations and the oil industry—who all want to be perceived as “green-friendly” and yet still make a profit off their endeavors. Yet an April 2007 editorial in the London Economist entitled “Castro was right” pointed out that corn-based ethanol isn’t even better for the environment, in that it requires almost as much energy to produce, if not more, as it releases when it is burned. (April 7)

Castro had noted that the production of ethanol “will happen after a great number of investments, which could only be afforded by the most powerful companies whose operations are based on the consumption of electricity and fuel.”

Biofuel use not only shifts the production of grain for food to fuel, but it encourages farmers to use more of their land for biofuel production—particularly in the U.S., with large subsidies coming from the government. With less land to produce these other foodstuffs, their prices increase as well.

It also encourages farmers to use conservation lands to produce more ethanol—the disastrous effects of which were seen in the Midwest flooding, where lands filled with naturally water-absorbing grasses had been pulled out of conservation programs to allow more acreage for corn.

And with the floods come a new concern for working people. Should crops be affected by extreme weather—and preliminary estimates indicate that as much as 15 percent less corn will be produced this year because of the floods—the potential exists for gas prices to increase even more as the push to add ethanol to gasoline grows. The New York Times reports that the floods helped the price of ethanol increase by 19 percent in one month. (July 1)

Since the World Bank report was leaked, the EU has made moves to reduce its targets for biofuel use, while the U.S. has not. For many suffering under the weight of high food prices—victims to the chaos of capitalist “planning”—the damage has already been done.