Food vs Fuel Here’s the kicker

Here’s the kicker:

consumers with one three hundredth per capita income compared to that of the developed countries cannot be expected to pay the same price for food-grains as those in the developed countries

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That’s my emphasis
I dug that out of some work looking at the effects food policy and income by the food and agriculture organisation of the United Nations, after a comment from Mark got me thinking

Mark suggested that perhaps I’d overplayed the impact on grain prices and supply that the new biofuels plants in Saltend, Hull will have. And maybe I have in the UK but I guess the food vs fuel debate is worrying on a couple of counts.

Firstly, global food policy is a mess. Wealthy places like the the EU did/does produce more food than it can eat and the US does traditionally grow more food than it can handle.
The European position is based on self sufficiency and the political need to keep farmers on the land and the US policy, I think, is also based around self sufficiency. But excess production in regions like Europe and the US means that there is enough for organisations like the UN to be able to buy to feed those in droughts at fairly low prices. Even if, as Oxfam points out, a lot of the money that funds this goes into the pockets of wealthy arable farmers in Europe and Big Farming in the US.
If we start reducing the excess then the price will rise and it will not be the rich Europeans and North Americans that are going to suffer (apart from higher interest rates as higher food prices translate into inflation) but really poor people in other parts of the world who are already spending a large proportion of their incomes on food. Small price increases may push food out of their economic reach this could lead to political destabilisation and worse in the shorter term.

Lawrence Taylor writing in Food price policies and nutrition in Latin America, published by the UN says

The market for staple foods in a poor country accounts for a substantial fraction of economic activity, is politically important, and, if left to itself, is highly unstable.

While over in a report on the Indian experience on household food & nutrition security the FAO suggest three definitions: Quoting from the International Conference on Nutrition in 1992:

“It is necessary to ensure a safe and nutritionally adequate food supply both at the national level and at the household level. It is necessary to have a reasonable degree of stability in the supply of food, both from one year to the other and during the year. And most critical, is the need to ensure that each household has physical, social and economic access to enough food to meet its needs”

That report continues to examine the destabilising effect of opening up India’s grain market to international competition and says

short term measures like public distribution of foodgrains, food coupons etc. will have to be continued because Indian consumer with one three hundredth per capita income compared to that of the developed countries cannot be expected to pay the same price for food-grains as those in the developed countries

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Diverting food crops into biofuels could be equally destabilising for a number of poor countries unless, and its a big if, the crops that would replace food crops are going to be sufficiently profitable for the farmers to make enough to buy the food they need.

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One Response to Food vs Fuel Here’s the kicker

  1. oereye 3 July, 2007 at 4:06 pm #

    In fact, even more evidence of the negative impacts of biofuels on food security (not to mention other issues) is beginning to emerge… see this new report on ‘agrofuels’
    http://www.tni.org/detail_pub.phtml?&know_id=188

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