Stop using food for biofuel, West told

Stop using food for biofuel, West told

India, Africa face shortages, huge increase in costs

Krittivas Mukherjee, Reuters Published: Thursday, April 10, 2008

NEW DELHI - India and African nations are calling on the Western world to rethink the diversion of huge amounts of food for biofuel, which has created shortages and driven up prices in poorer countries.

Faced with record-high oil prices, governments in Europe, the United States and Canada are subsidizing the production of ethanol, a gasoline substitute, from corn and other grains.

While the move to turn food into fuel has benefitted a few African nations with grain surpluses, such as Uganda, speakers at the first Africa-India Forum yesterday blamed the tactic for skyrocketing prices and shortages.

Rising food prices threaten many African economies, while in India food price increases are largely responsible for driving inflation to 7%, a three-year high.

"These days the farms have been put to biofuel production, creating a shortage of food and therefore creating a problem of high prices," said Jakaya Mrisho Kikwete, the Tanzanian President and head of the African Union.

With shortages and high prices set to continue for the foreseeable future, the UN Food and Agriculture Organization (FAO) warned food riots which have struck several impoverished countries in recent weeks could spread.

"The problem is very serious around the world due to severe price rises and we have seen riots in Egypt, Cameroon, Haiti and Burkina Faso," Jacques Diouf, director-general of the FAO, told reporters in New Delhi.

Five people have been killed in a week of demonstrations in Haiti over high food prices in the poorest country in the Americas, while unions in the West African nation of Burkina Faso called a general strike over soaring food and fuel costs.

"There is a risk that this unrest will spread in countries where 50% to 60% of income goes to food," Mr. Diouf said.

Global food prices, based on United Nations records, rose 35% in the year to the end of January, markedly accelerating an upturn that began, gently at first, in 2002.

Since then, prices have risen 65%. In 2007 alone, according to the FAO's world food index, dairy prices rose nearly 80% and grain 42%.

Manmohan Singh, the Indian Prime Minister, said the Indian and African economies must acquire the momentum needed to meet all their food needs through domestic production.

"There's no single answer to the question of food security," he told a news conference at the end of the summit, adding agriculture was an area with huge potential for cooperation between India and Africa.

Mr. Diouf said world cereal stocks were enough to meet demand for just eight to 12 weeks, while grain supplies were at their lowest since the 1980s.

"This is due to higher demand from countries like India [and] China, where GDP grows at 8% to 10% and the increase in income is going to food," Mr. Diouf said after meeting India's Farm Minister, Sharad Pawar.

"I welcome economic growth in India and China, but I also hope they will invest in agriculture because these two countries account for 2.2 billion people out of six billion."

He said he was advising governments to invest in irrigation, storage facilities and rural infrastructure and increase productivity to meet the challenge of food scarcity.

Some of the world's most populous countries have felt the impact of higher prices after rice joined a wider rally that has buoyed other grains such as wheat and corn.

Rice prices in Thailand, the world's biggest rice exporter, have doubled since the start of this year after India heavily restricted and then banned the export of non-basmati rice to ensure it had enough to feed its people.

In Manila, President Gloria Macapagal Arroyo unveiled a series of measures to boost rice production as troops armed with M-16 rifles supervised the sale of subsidized grain and the government threatened to jail hoarders for life.

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FROM FOOD TO FUEL - Since April, 2006, eight million hectares of corn, wheat, soya and other crops that once provided animal feed and food have been diverted from food production in the United States to biofuels. - In 2008, 18% of U.S. grain production will go to biofuels. - Brazil -- the world's largest ethanol producer -- Argentina, Canada and Eastern Europe are diverting large amounts of sugar cane, palm oil and soybean crops to biofuels. - Europe has mandated a 5.75% use of biofuels by 2010. If achieved, this could require 20% of Europe's cropland to be diverted from food to fuel production. - If Australia were to replace 10% of its unleaded gasoline with bioethanol, and if this were to come from fermentation of wheat, it could require about 40% of the country's annual average wheat crop.