Biofuels - An Assault on the World`s Poor
-
18/02/2008
-
Business Standard
Western citizens want to use the limited land to produce ethanol rather than food for the poor. Food riots in Indonesia, Mexico, Egypt, the Philippines and Vietnam. Price controls and food rationing in Pakistan and China. Are we back to the Malthusian trap as prices of agricultural and food commodities from wheat and corn to dairy products and meat have risen in the last few years to historically unprecedented levels? Or is this another malign byproduct of the current Western obsession with carbon emissions, purported to lead to planet-destroying global warming (as discussed in my columns of June and July 2007)? This is the subject of this column. Prima facie, there is a Malthusian case. Demand for cereals has risen by 8% between 2000 and 2006, fuelled by rising population and incomes in the Third World, with the normal short-run inelasticity of agricultural supply (supply rises by 1-2% when prices rise by 10%) being worsened by the decade-long drought in Australia. This in turn is blamed on global warming caused by carbon emissions, seemingly strengthening the "carbon warriors' cause. These demand and supply factors have led to a doubling of cereal prices between 2000 and 2008. As food staples form a major part of the consumption bundle of the world's poor, net buyers of food in the Third World have been hit hard. The Malthusian scepter laid to rest with the Green Revolution has reappeared. But has it? Examining the components of the growth in consumption of cereals in recent years, the International Food Policy Research Institute (IFPRI) finds: "While cereal use for food and feed increased by 4 and 7 per cent since 2000, respectively, the use of cereals for industrial purposes