US corn biofuel costs poor nations $6.6bn
October 12th 2012
Growing use of US-produced corn for biofuel has added $6.6 billion to the food import bills of developing countries over the past six years, highlighting the need to rethink energy policies that are making food more expensive for poor people, says new research. The amount of US maize that goes into ethanol equals around 15 percent of global corn production, and in recent years this has contributed to rising food prices around the world, says the study from Tufts University in Massachusetts. 'Higher corn prices have had a direct impact on the food-import bills of developing countries, many of which have become heavily dependent on outside sources of basic food commodities in the last 25 years,' the paper explains. It cites a recent survey by the National Academy of Sciences estimating that biofuels expansion globally accounted for 20-40 percent of international food price surges in 2007-2008. The price hikes led to riots in many poorer nations.
This year, a severe drought in the American Midwest has reduced corn harvests, boosting prices again and triggering calls for the US government to relax its mandate for boosting biofuel use, known as the Renewable Fuel Standard (RFS). Ethanol now makes up nearly 10 percent of US gasoline sales. The paper calculates that, from 2006 to 2011, ethanol-related corn price increases cost all corn-importing countries $11.6 billion. Developing nations bore around 57 percent of the burden, with Mexico, Egypt, Colombia, Iran and Malaysia paying the most. The study makes a link between high ethanol-related import costs in North Africa - $1.4 billion over the six-year period - and unrest in that region. It notes that costs were also high in other import-dependent countries experiencing social unrest – Syria ($242 million), Iran ($492 million) and Yemen ($58 million). 'This simply highlights the importance of food price stability to political stability, and the potential contribution of ethanol-related price increases to political instability,' it adds.
Read the full article: Reuters AlertNet
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