Thursday, July 24, 2008

Biofuels and foodgrains inflation

The rise in global foodgrain prices have been attributed to factors as wide ranging as increased consumption in India and China, diversion of crops and land for biofuel cultivation, and speculation in the commodities futures markets. However, there is mounting evidence that biofuels may have been the major contributing factor to the rising foodgrain prices.

First there was a leaked internal World Bank study which suggested that biofuels have forced global food prices up by 75%. Now here comes an OECD study which find that biofuels were a significant element in the 2005-2007 food price surge as they accounted for 60% of the growth in global consumption of cereals and vegetable oils.

Another OECD study which does an assessment of the subsidies offered in the developed economies for biofuel production finds that their effectiveness is disappointingly low, with public support costing between $960 and $1700 per tonne of greenhouse gas emissions saved.

1 comment:

Anonymous said...

will it be better for developing economies to have a high value proposition in form of biofuels finally in agriculture? will it break the shackles of commodities trade that they are presently trapped in? Is the continuing push to developing countries agriculture to remain mere 'commodity suppliers' to the value adding industries of the developed, leading to it being trapped in the zone of sustainable agriculture only, never rising above?