Chicago (IL) – It is quite apparent that the biofuel manufacturers is taking a beating these days with accusations that the industry is causing food prices to jump. Now the Guardian cites a leaked a World Bank report claiming that biofuels have caused the cost of food to rise by about 75% - which is significantly higher than the single-digit numbers we have heard so far.
The leaked World Bank apparently includes numbers that are dramatic when we compare them to the numbers issued by the United States government. The U.S. President’s Council of Economic Advisors has stated that the use of corn ethanol has caused world food prices to climb by only 3%.
The Guardian deems that the World Bank report is “the most detailed analysis of the crisis so far, carried out by an internationally-respected economist at global financial body”. We have yet to get our hands on the document, but he Guardian says that the report is an overview of three factors - grain that was diverted from food to fuel, land that was diverted to biofuel production, and financial speculation in grains.
The article mentions that other studies that have been conducted do not take into account all of these factors and therefore may have come up with lower percentage numbers.
The World Bank report, completed in April, has not been published and if the Guardian is right, it may not be available for some time. The newspaper mentions sources who claim that the document “has not been published to avoid embarrassing President George Bush”. This claim, however, sounds questionable, as Bush has not been the only one citing low numbers.
For example, research firm New Energy Finance recently stated that biofuels are “far from the dominant” reason for the rising cost of food. The firm said that biofuels only contributed to an 8.1% increase in the cost of grain globally (that research did mention that sugarcane-based ethanol added a 70% increase to the cost of sugarcane in Brazil.)