Oxfam economic policy adviser Ruth Kelly (right) unveils her new paper, published today, on a really simple, bad policy that rich countries can fix – biofuels.
The past five years have seen two record spikes in the price of food; and prices are rising again, with corn and soy hitting record highs in summer 2012. There is intense disagreement about what causes food price spikes and how to address them, and this often gives rise to confusion and inaction. But, unusually, there is one thing most experts agree on: scrapping biofuel policies would make a real difference. In June 2011, ten international organisations were so convinced of this fact that they made an unprecedented call for G20 governments to scrap biofuel policies. Last week, the European Commission and the French government finally woke up to the fact that it is simply unacceptable to burn food while millions around the world go hungry.
In 2009 EU governments agreed that by 2020 all ground transport fuel sold in the EU would contain about 9 parts biofuel to every 91 parts petrol or diesel. In a new report published in advance of today’s meeting of EU Energy Ministers to discuss renewable energy, Oxfam shows that EU biofuel mandates are inextricably connected to hunger and land grabs in developing countries. Modelling by the UK government suggests that suspending the EU biofuel mandate in 2018 could reduce international price spikes by up to 35 percent. And that is just the impact that is relatively easy to model. A drop in local or regional food production has a much greater impact than international commodity prices on retail prices, especially in regions that are relatively isolated from international markets, like sub-Saharan Africa. As biofuel production displaces local, national and regional food production, not only do people have to buy the food they would otherwise have grown, but there is less for sale; increased demand and reduced supply push up local prices.
The leaked European Commission proposal is welcome in so far as it recognises, for the first time, that EU biofuel mandates exacerbate both climate change and hunger. But, as the proposal stands, it is no solution and could in fact make matters worse. At the moment about 4.5 percent of ground transport fuel used in the EU is made up of biofuels, of which about 90 percent comes from food crops. Not only would the Commission proposal increase that amount to 5 percent, but it would allow biofuel made from non-food crops to make up the difference – which uses up scarce resources of land, water and soil when they should be used to produce much-needed food.
According to Oxfam’s calculations, the land used to produce the biofuels used in the EU in 2008 has the potential to produce enough wheat and maize to feed 127 million people. As the proportion of biofuel in our petrol and diesel rises, so does the amount of land it gobbles up. Most land deals happen in the poorest countries with the weakest protection of people’s land rights, according to the IMF and World Bank; economic regressions show that other variables, like availability of land and ranking on the Doing Business indicators, are simply irrelevant. Affected communities rarely have a say, and women are the least likely to be consulted even though they are often the most seriously affected. The overwhelming consensus from research on the welfare impact of large-scale biofuel production shows that benefits are reaped by a small elite. As research from Indonesia concludes, ‘there are some winners but many losers’.
EU governments have it within their power to make a difference to the lives of millions of hungry people. It is completely unacceptable that we are burning food in our petrol tanks while poor families go hungry and millions are being pushed off their land. Fighting hunger has never been so simple: it’s time to scrap the mandates.
Ruth Kelly is an economic policy adviser for Oxfam