Food vs. Fuel Debate Ignores Realities of Biofuel Production

This finding is one of the results of the new study - “Do biofuels contribute to price volatility and food insecurity?” by Prof. Michael Schmitz of the University of Giessen in Germany.

Local markets in developing countries are regularly cut off from the fluctuations of global agricultural prices. The strong price swings on global agricultural markets in recent years have had only a minimal impact on regions where people are suffering from famine. 

“The decoupling of markets in developing countries frequently leads to an intensification of the famine issue,” said Prof. Michael Schmitz. Famine and poverty are instead the result of bad governance, corruption, civil wars and extreme weather. Schmitz, an agricultural economist, was a member of the Scientific Advisory Board on Agricultural Policy of the German Federal Ministry of Food and Agriculture for many years. 

For some developing and emerging countries, biofuels are actually a willing source of additional export revenue and saved import expenses for fossil energy, Schmitz said.

Prof. Jo Swinnen from the University of Leuven noted that NGOs and large international organisations have undertaken a dramatic change of course in recent years. While low global agricultural prices were regarded as contributing to global hunger until 2006, high global agricultural prices have been blamed for global hunger since 2009. 

“NGOs have undertaken this complete redirection of their argument, which raises questions about just how valid the arguments from before 2006 and since 2009 really are,” Swinnen said. Among other positions, he was Lead Economist at the World Bank and an advisor to the European Commission, the Organization for Economic Cooperation and Development (OECD) and the Food and Agricultural Organization of the United Nations (FAO). In fact, it ultimately comes down to the situation of one’s own household: A net food producer profits from high prices while a net consumer suffers under them. “A more differentiated examination than that currently being undertaken by the NGOs is essential, also when it comes to biofuels,” Swinnen said.