IMF - Half of Food Price Increase due to Biofuels

The IMF recently estimated that the shift of crops out of the food supply to produce biofuels accounts for almost half of the recent increases in the global food prices. That has led to calls from anti-poverty groups to rethink government policies to boost biofuel production at a time that the IMF estimates that global food prices rose by 43 percent in the 12 months ending in March.

The US disputes this but states: "ethanol production is a significant contributor to increases in corn prices"

All agree there are additional factors including: increased demand from developing countries, especially China and India, rising energy costs and draughts in some crop producing countries

Farm Price Supports

Montreal Gazette May 14, 2008

The ongoing WTO negotiations-the Doha Round of trade talks is stalled because of the rich countries' unwillingness to reduce their high levels of financial support to their farmers. Across the OECD countries, an average of 31% of farmers' income comes either directly from government coffers or indirectly from policies forcing consumers to pay artificially high prices.

But the bigger problem is the effect on people in developing countries. By encouraging farmers to supply more wheat, barley, sugar, or whatever, the rich-country policies drive down world food prices and make farming in poor countries unprofitable. If we really care about helping the countries in the developing world, we would prove it by eliminating our farm-support policies and thereby driving the Doha trade talks to a successful completion.