Biofuels 'caused food price spike'

4 July 2008 10:58am

Biofuels have caused world food prices to go up by 75%, it has been reported.

The Guardian said it has seen the figure in a confidential World Bank report which contradicts US government claims that using plants to produce fuel contributes less than 3% to food prices.

According to the paper, sources believe the analysis - carried out by a respected economist at the global financial body - has not been published to avoid embarrassing US President George Bush.

The leaked study reportedly concludes that income growth in developing countries was not a major factor in food price rises, while successive droughts in Australia had only a marginal impact.

Instead, it argues that the EU and US drive for biofuels has had by far the biggest impact on food supply and prices.

"Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate," the Guardian reported the study as saying. "The basket of food prices examined in the study rose by 140% between 2002 and this February."

The report estimates that higher energy and fertiliser prices accounted for an increase of only 15%, while biofuels have been responsible for a 75% jump over that period."

Biofuels - derived from crops such as corn, rapeseed, palm and soya - as an alternative to petrol and diesel were seen as the environmentally-friendly solution to global warming and rising fuel prices.

The high-profile international issue is due to be discussed by G8 members in Japan.

The report also comes ahead of the Government releasing its own report on the impact of biofuels by Professor Ed Gallagher, head of the Renewable Fuels Agency.

© The Press Association