Biofuels have caused huge food price hike

According to a report in the Guardian newspaper the growing use of biofuels has caused world food prices to go up by 75 per cent.

The UK newspaper said it has seen the figure in a confidential World Bank report contradicting US government claims that using plants to produce fuel contributes less than 3 per cent to food prices.

According to the paper, sources believe the analysis – carried out by a respected economist at the global financial body – has been withheld from publication in order 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 per cent between 2002 and this February. The report estimates that higher energy and fertiliser prices accounted for an increase of only 15 per cent, while biofuels have been responsible for a 75 per cent 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 next week in Japan.

Today's report also comes ahead of the UK government releasing its own report on the impact of biofuels by Professor Ed Gallagher, head of the Renewable Fuels Agency.

Shadow agriculture spokesman James Paice let slip during a parliamentary debate that the Gallagher report found increasing production of biofuels was "not sustainable".

In Tory-led debate on food security, Paice was challenged to set out Conservative policy on biofuels.

He replied: "The issue of biofuels has to be based on sustainability. It's quite clear in the Gallagher report last week – or whenever it was – that it's not sustainable."

The review was commissioned by Transport Secretary Ruth Kelly in February to look into concerns that biofuel production could have an unwanted side effect of raising global food prices.

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