How Biofuels Could Starve The Poor

Lynne Kiesling

How Biofuels Could Starve the Poor is an article in the May/June 2007 issue of Foreign Affairs by Ford Runge and Benjamin Senauer. It’s a well-written, thorough analysis of the widespread effects of government policies favoring biofuels. Their focus is international, discussing EU initiatives on biodiesel as well as Brazil’s experience with cane-based ethanol.

They do a good job of highlighting the negative food supply consequences of the push for biofuels, particularly corn-based biofuels:

The International Food Policy Research Institute, in Washington, D.C., has produced sobering estimates of the potential global impact of the rising demand for biofuels. Mark Rosegrant, an IFPRI division director, and his colleagues project that given continued high oil prices, the rapid increase in global biofuel production will push global corn prices up by 20 percent by 2010 and 41 percent by 2020. The prices of oilseeds, including soybeans, rapeseeds, and sunflower seeds, are projected to rise by 26 percent by 2010 and 76 percent by 2020, and wheat prices by 11 percent by 2010 and 30 percent by 2020. In the poorest parts of sub-Saharan Africa, Asia, and Latin America, where cassava is a staple, its price is expected to increase by 33 percent by 2010 and 135 percent by 2020. The projected price increases may be mitigated if crop yields increase substantially or ethanol production based on other raw materials (such as trees and grasses) becomes commercially viable. But unless biofuel policies change significantly, neither development is likely.

The production of cassava-based ethanol may pose an especially grave threat to the food security of the world’s poor. Cassava, a tropical potato-like tuber also known as manioc, provides one-third of the caloric needs of the population in sub-Saharan Africa and is the primary staple for over 200 million of Africa’s poorest people. In many tropical countries, it is the food people turn to when they cannot afford anything else. It also serves as an important reserve when other crops fail because it can grow in poor soils and dry conditions and can be left in the ground to be harvested as needed.

Earlier in the article they point out that filling the gas tank of an SUV with ethanol would use enough corn to supply one person with enough calories to live for an entire year. How’s that for a sobering tradeoff?

They also point out the extent to which this industry has fostered a very non-market environment, to its benefit:

One root of the problem is that the biofuel industry has long been dominated not by market forces but by politics and the interests of a few large companies. Corn has become the prime raw material even though biofuels could be made efficiently from a variety of other sources, such as grasses and wood chips, if the government funded the necessary research and development. But in the United States, at least, corn and soybeans have been used as primary inputs for many years thanks in large part to the lobbying efforts of corn and soybean growers and Archer Daniels Midland Company (ADM), the biggest ethanol producer in the U.S. market.

The last part of the article discusses how the increase in hunger that could result from increased biofuels production is a Faustian bargain, because the purported environmental benefits of biofuels aren’t even that large, if they exist at all. They give a concise but thorough summary of the existing research on the net energy production from corn-based biofuels and other biofuels.

A highly recommended read, with thanks to the Private Sector Development Blog for the pointer.