July 6th 2008 — A confidential internal report of the World Bank from April 2008, shows that the production of agro-industrial fuels, especially ones derived from maize, are the main cause of food price increases, Britain’s Guardian newspaper has revealed (Aditya Chakrabortty, The Guardian 4/7/ 2008).

One is not dealing with a small contributory factor to the food crisis. According to the report coordinated by Don Mitchell, a respected World Bank economist, biofuels production is responsible for up to 75% of the increase in food prices, not the 3% alleged by the US government. World Bank sources told the Guardian that the report was suppressed so as "not to embarrass President Bush". Another 15% of the increase is due to price increases in oil and agro-chemicals.

The report asserts that three primary factors, via a domino effect, are responsible for the food price increases. Firstly, a third of US maize production is used for ethanol instead of food. Europe is using half the vegetable oils it produces or imports for biodiesel. Secondly, one has the incentive given to farmers to assign more land to biofuels instead of food. Thirdly, the encouragement of biofuels cleared the way for heavy investment by hedge funds, causing more price increases.

The hedge funds abandoned the crisis-ridden property sector and aggressively went into present and future grain stocks as part of their financial gambling, boosting price rises. At the moment, more than 60% of existing reserves and future production of maize, wheat and soya have been snapped up by this type of fund.

The report also confirms that the increase in buying power of countries like China and India "did not lead to an increase in demand for grain globally", as Alejandro Nadal explained ("Adios al factor China", La Jornada, 11/6/2008). This is one of the favourite arguments of the US and Brazil to explain away the food crisis and shift blame for the aggressive promotion of biofuels. Mitchell concludes though, that the impact of Brazilian ethanol did not carry the same weight in the international price debacle. Naturally, for the World Bank, the fact that Brazilian ethanol is subsidised by semi-slave labour and devastation of unique eco-systems does not represent a cost.

According to the Financial Times (30/10/2007) the annual subsidy paid by OECD countries for agro-industrial fuels is US$15bn. David King, former chief scientific advisor to the British government told the Guardian, that with biofuels, " we are subsidising food price increases while doing nothing really to confront climate change."

It is not the first time the World Bank has criticised biofuels, but this report is much more detailed and precise than previous ones. However, the Bank’s proposed "alternative" is the same as that of the agribusiness multinationals, to increase food subsidies (thus subsidising the very same  agribusiness multinationals that win both from expensive food and equally from biofuels, in addition to then selling grains as "food aid") while reinforcing support for future generations of biofuels, which will include genetically manipulated crops and trees or, even worse, things like synthetic artificial life, thus creating even more competition for land and water.

Given this outlook, it is absurd and criminal of the Mexican government to continue insisting on biofuel production that only benefits (as it surely does) big agribusiness multinationals, like Cargill and Archer Daniels Midland that dominate the grain trade in Mexico and the world, and those of the biotechnology aristocracy, like Monsanto, Syngenta and Dupont, that control the seeds of maize and other crops, with the same ultimate objective.

Any investment in biofuels, of any kind whatsoever, will only spur food scarcity and high prices. If on top of that, genetically altered maize gets approved, as the Mexican government wants to do so as to please the multinational companies, that will increase dependency on those foreign companies at the same time as contamination from genetically altered plants damages conventional traditional crops. Those crops are Mexico’s historic patrimony. In the hands of the country’s rural workers and their families, they are the real solution to food production and food sovereignty.

Silvia Ribeiro is a researcher with the Erosion, Technology and Concentration Group

translation copyleft Tortilla con Sal

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