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Policy must control food and price increases: von Braun warns subsidies for agriculture and biofuel will push up price of grains and feedstock

Posted by gmarkets on 19 September, 2007

Growth in biofuels could significantly push up food and grain prices, Dr von Braun, director-general of the International Food Policy Research Institute told the The Canberra Times(15/08/07, p. 15).

IFPRI predicts price increases: According to analysis by the International Food Policy Research Institute(IFPRI), such price increases could range between 5 and 15 per cent for various crops, given the current plans for biofuel production. “Aggressive growth in biofuels, however, could lead to even greater price increases,” said von Braun.

Prices to escalate by 2020: “By 2020, prices for grain crops could increase by 20-40 per cent, over and above other causes for price increases including increased demand from the growing and wealthier populations of developing countries,” continued Von Braun.

Linking hunger with poverty: Von Braun acknowledged that critics had argued that crop production for biofuels competed with food production, reducing access to affordable food. However, he suggested “Hunger is not simply due to a lack of food availability. The primary cause of hunger is poverty. If increased production of biofuels can raise the incomes of small farmers and rural workers in developing countries, it may in fact improve food security.”

Risks for food security: “Still, risks for food security remain, particularly if a country’s biofuel sector is not well managed and if oil prices are unstable,” said Von Braun. “Policy-makers have recognised that the high demand for energy and the apparent enormous potential of biofuels do not automatically guarantee a positive impact on poor people and developing countries.”

Pushing for social change: “Creating an industry that helps the neediest people improve their lives and livelihoods will require careful management by both the public and private sectors. In order to make a difference in the lives of poor people, as both energy producers and consumers, and to make strong environmental and economic contributions, biofuel technology needs further advancement.”

All-encompassing policies: “A comprehensive policy framework is needed that covers science and technology, markets and trade, and insurance and social protection for the poor. The latter could include employment programs, cash transfer programs, and social security systems for the poorest.”

An international endeavour: “To develop a pro-poor biofuels sector that is sustainable, players at the international, national, and local levels have crucial roles to play. International institutions must help transfer knowledge and technology for developing an efficient and sustainable biofuel industry to poor countries. The international community must also create a level playing field for trade in biofuels.”

Promoting efficiency and investment “By subsidising domestic agriculture and biofuel industries, the price of grains and other feedstock rises, distorting the opportunities for biofuel production and trade.At the national level, policy-makers must take steps to create a well-functioning market for biofuels, to promote investment in associated areas like flexible-fuel vehicles and fuelling stations, and to regulate land use in line with socio­economic and environmental goals.”

Reference: Dr von Braun was the director-general of the International Food Policy Research Institute. He was scheduled to speak at the Crawford Fund international development conference at Parliament House on 15 August at 9am.

The Canberra Times, 15/8/2007, p. 15

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