Amid rush to develop biofuels, food prices and hunger increase

But last year, 98 per cent of cassava chips exported from Thailand, the world’s largest cassava exporter, went to just one place and almost all for one purpose: to China to make biofuel. Driven by new demand, Thai exports of cassava chips have increased nearly fourfold since 2008, and the price of cassava has roughly doubled.

Each year, an ever larger portion of the world’s crops – cassava and corn, sugar and palm oil – is being diverted for biofuels as developed countries pass laws mandating greater use of nonfossil fuels and as emerging powerhouses like China seek new sources of energy to keep their cars and industries running. Cassava is a relatively new entrant in the biofuel stream.

But with food prices rising sharply in recent months, many experts are calling on countries to scale back their headlong rush into green fuel development, arguing that the combination of ambitious biofuel targets and mediocre harvests of some crucial crops is contributing to high prices, hunger and political instability.

This year, the UN Food and Agriculture Organisation reported that its index of food prices was the highest in its more than 20 years of existence. Prices rose 15 per cent from October to January alone, potentially “throwing an additional 44 million people in low-and middle-income countries into poverty,” the World Bank said.

Soaring food prices have caused riots or contributed to political turmoil in a host of poor countries in recent months, including Algeria, Egypt and Bangladesh, where palm oil, a common biofuel ingredient, provides crucial nutrition to a desperately poor populace. During the second half of 2010, the price of corn rose steeply – 73 per cent in the United States – an increase that the UN World Food Programme attributed in part to the greater use of US corn for bioethanol.

In the United States, Congress has mandated that biofuel use must reach 36 billion gallons annually by 2022. The European Union stipulates that 10 per cent of transportation fuel must come from renewable sources like biofuel or wind power by 2020. Countries like China, India, Indonesia and Thailand have adopted biofuel targets as well.

To be sure, many factors help drive up the price of food, including bad weather that ruins crop yields and high oil prices that make transportation costly. Last year, for example, unusually severe weather destroyed wheat harvests in Russia, Australia and China, and an infestation of the mealy bug reduced Thailand’s cassava output.

Olivier Dubois, a bioenergy expert at the Food and Agriculture Organisation in Rome, said it was hard to quantify the extent to which the diversions for biofuels had driven up food prices. “The problem is complex, so it is hard to come up with sweeping statements like biofuels are good or bad. But what is certain is that biofuels are playing a role. Is it 20 or 30 or 40 percent? That depends on your modeling,” he said.

Rigid fuel mandate

While no one is suggesting that countries abandon biofuels, Dubois and other food experts suggest that they should revise their policies so that rigid fuel mandates can be suspended when food stocks get low or prices become too high.

“The policy really has to be food first. The problems occur when you set targets for biofuels irrespective of the prices of other commodities,” said Hans Timmer, director of the Development Prospects Group of the World Bank. Timmer said that the recent rise in oil prices was likely to increase the demand for biofuels.

China learned this the hard way nearly a decade ago when it set out to make bioethanol from corn, only to discover that the plan caused alarming shortages and a rise in food prices. In 2007 the government banned the use of grains to make biofuel. Chinese scientists then perfected the process of making fuel from cassava, a root that yielded good energy returns, leading to the opening of the first commercial cassava ethanol plant several years ago.

“They’re moving very aggressively in this new direction; cassava seems to be the go-to crop,” said Greg Harris, an analyst with Commodore Research and Consultancy in New York who has studied the trade. In addition to expanding cassava cultivation at home, China is buying from Cambodia and Laos as well as Thailand.

The Chinese demand for cassava could also dent planned biofuel production in poorer Asian nations: in the Philippines and Cambodia, developers were recently forced to suspend the construction of cassava bioethanol plants because the tuber had become too expensive.  Biofuels development in wealthier nations has already proved to have a powerful effect on the prices and the cultivation of crops.

Encouraged by national biofuel subsidies, nearly 40 per cent of the corn grown in the United States now goes to make fuel, with prices of corn on the Chicago Mercantile Exchange rising 73 percent from June to December 2010.

European biofuels developers are buying large tracts of what they call “marginal land” in Africa with the aim of cultivating biofuel crops, particularly the woody bush known as jatropha. Advocates say that promoting jatropha for biofuels production has little impact on food supplies.

But some of that land is used by poor people for subsistence farming or for gathering food like wild nuts.  “We have to move away from the thinking that producing an energy crop doesn’t compete with food,” said Dubois of the Food and Agriculture Organisation. “It almost inevitably does.”