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Biofuel, Food Shortages, & the Comeback of the Biotech Bullies

1.Biofuel is a ticking bomb

2.How shortages, stockpiles led to a global food crisis

3.The come back of the biotech industry

NOTE: More and more analysts are identifying the Bush inspired corn-ethanol boom as the key catalyst in sending food prices skyrocketing.

The price increase for other commodities followed that of corn - after it had been rising for months, with corn directly contributing to many of the price hikes by pulling acreage away from other crops such as wheat and soya. (item 2).

Of course, it didn't help that the EU followed suit in cranking up "biofuel" demand without properly researching the likely consequences (item 1)

What has not had sufficient attention is the question of who exactly drove these rushed "biofuel" policies. In the case of the EU, the biotech industry is known to have been amongst those on whom the Commission leant for guidance in developing its disastrous biofuel targets.  (item 3)

The Bush Adminstration similarly leant on big agribiz interests in developing its ethanol policy - a policy that's netted those same interests a fortune while providing the biotech industry and its supporters with a new platform from which to promote GM crops as the solution to the food crisis they helped to create!

EXTRACT: "If you didn't have ethanol, you would not have the prices we have today," said Bruce Babcock, a professor of economics and director of the Center for Agricultural and Rural Development at Iowa State University. (item 2)

A review of the impact of biofuels has been ostentatiously ordered but we are going ahead with the renewable transport fuel obligation before we hear the results, which is like going to war and then examining the case for it. (item 1)
1. Biofuel is a ticking bomb
The Sunday Times (UK), May 4 2008

DAVID SMITH (The way the world can feed itself, News Review, last week) notes that even Gordon Brown has recognised that biofuels are a contributory factor in the global food crisis. Our frustration is the ever-widening gap between Brown's rhetoric and his actions.

While he calls summits and postures internationally he is dithering on biofuels. On April 15 the government introduced a law enforcing biofuel content at the pumps. A review of the impact of biofuels has been ostentatiously ordered but we are going ahead with the renewable transport fuel obligation before we hear the results, which is like going to war and then examining the case for it. Also the review is being carried out by the Renewable Fuels Agency, a body funded and set up to roll out biofuels, which has directors from corporations with biofuel interests (BP and Bionerg). This doesn't fill us with confidence in its findings.

As Smith notes, a big shift is inevitable, but in the meantime we will have caused great suffering and loss of life from hunger and malnutrition and pushed climate change closer to the unseen "tipping point" so many scientists fear. For that, Brown must take his share of the responsibility.

Phil Thornhill, Campaign Against Climate Change
Dr Andrew Boswell, Co-Director, Biofuelwatch
2. How shortages, stockpiles led to a global food crisis
By Anthony Faiola
Washington Post, 4 May 2008

The globe's worst food crisis in a generation emerged as a blip on the big boards and computer screens of America's great grain exchanges. At first, it seemed like little more than a bout of bad weather.

In Chicago, Minneapolis and Kansas City, traders watched from the pits early last summer as wheat prices spiked amid mediocre harvests in the United States and Europe and signs of prolonged drought in Australia.

But within a few weeks, the traders discerned an ominous snowball effect - one that would eventually bring down a prime minister in Haiti, make more children in Mauritania go to bed hungry, even cause executives at Sam's Club to restrict sales of large bags of rice.

As prices rose, major grain producers, including Argentina and Ukraine, battling inflation caused in part by soaring oil bills, were moving to bar exports on a range of crops to control costs at home. It meant even less supply on world markets.

Corn prices had already been climbing for months on the back of booming government-subsidized ethanol programs. Soybeans were facing pressure from surging demand in China. But as supplies in the pipelines of global trade shrank, prices for corn, soybeans, wheat, oats, rice and other grains began shooting through the roof.

At the same time, food was becoming the new gold.

Investors fleeing Wall Street's mortgage-related strife plowed hundreds of millions of dollars into grain futures, driving prices up more. By Christmas, a global panic was building. With fewer places to turn to, and tempted by the weak dollar, nations staged a run on the U.S. wheat harvest.

Foreign buyers, who typically seek to purchase one or two months' supply of wheat at a time, suddenly began to stockpile. They put in orders on U.S. grain exchanges two to three times larger than normal as food riots began to erupt worldwide. That led major domestic U.S. mills to jump into the fray with their own massive orders, fearing that there would soon be no wheat left at any price.

"Japan, the Philippines, [South] Korea, Taiwan - they all came in with huge orders, and no matter how high prices go, they keep on buying," said Jeff Voge, chairman of the Kansas City Board of Trade and himself a trader.

The food price shock now roiling world markets is destabilizing governments, igniting riots, and threatening to send a new wave of hunger rippling through the poorest nations. It is outpacing even the Soviet grain emergency of 1972-75, when world food prices rose 78 percent.

By comparison, from the beginning of 2005 to early 2008, prices leapt 80 percent, according to the U.N. Food and Agriculture Organization.

At least 14 countries have been racked by food violence.

After hungry mobs beset Port-au-Prince, Haitian Prime Minister Jacques-Edouard Alexis was forced to step down in April.

In Malaysia, Prime Minister Abdullah Ahmad Badawi is struggling for political survival after a March rebuke from voters furious over food prices. In Bangladesh, 20,000 workers protesting food prices rampaged through the streets, injuring 50 people.

To quell unrest, Indonesia and other countries are digging deep to boost food subsidies. The U.N. World Food Program has warned of an alarming surge in hunger in areas as far-flung as North Korea and West Africa.

"This crisis could result in a cascade of others . . . and become a multidimensional problem affecting economic growth, social progress, and even political security around the world," U.N. Secretary General Ban Ki-moon said.

Prices for some crops - such as wheat - have begun to descend from their highs. As farmers rush to plant more wheat now that profit prospects have climbed, analysts predict prices may come down as much as 30 percent in coming months. But few believe they will go back to where they were in early 2006. The world must cope with the new reality of more costly food.

For the one billion people living on less than $1 a day, it's a matter of survival.

In a mud hut on an edge of the Sahara, Manthita Sou, a 43-year-old widow in the Mauritanian desert village of Maghleg, is confronting wheat prices that are up 67 percent on local markets in the last year. Her solution: stop eating bread. Instead, she has downgraded to cheaper foods, such as sorghum.

But sorghum has jumped 20 percent in the last 12 months. Living on the 50 cents a day she earns weaving textiles to support a family of three, her answer has been to cut out breakfast, drink tea for lunch, and ration a small serving of soupy sorghum meal for dinners.

Countries that have driven food demand in recent years are now grappling with the cost of their own success - rising prices. Although China has tried to calm its people by announcing reserve grain holdings of 30 to 40 percent of annual production, a number that was a state secret, anxiety is still running high.

Grain hoarding is reported in the province of Guangdong; consumers have stripped store shelves of bags of rice in Hong Kong.

In India, the government recently scrapped all import duties on cooking oils and banned exports of all but the distinctive basmati rice.

At a dusty and nearly empty market in one New Delhi neighborhood, shopkeeper Manjeet Singh, 52, said people had started hoarding out of fear that stocks of rice and oil would run out. He said customers also were asking for cheaper goods, like groundnut oil instead of soybean oil.

Even wealthy nations are being forced to adjust to a new normal. In Japan, a country with a distinct cultural aversion to cheaper, genetically modified grains, manufacturers are risking public backlash by importing them for use in processed foods.

In the United States, experts say consumers are scaling down on quality and scaling up on quantity if it means a better unit price.

"A bigger pinch than ever before," said Pat Carroll, a retiree in Washington. "I don't ever remember paying $3 for a loaf of bread."

The crisis is driven by an unusual linkage in the food chain.

A big reason for higher wheat prices, for instance, is the multiyear drought in Australia, something that scientists say may become persistent because of global warming. But wheat prices are also rising because U.S. farmers have been planting less of it, or moving wheat to less fertile ground, and planting more corn to capitalize on the biofuel frenzy.

"If you didn't have ethanol, you would not have the prices we have today," said Bruce Babcock, a professor of economics and director of the Center for Agricultural and Rural Development at Iowa State University.

After the fall of the Berlin Wall in 1989, the world seemed to shrink as markets rapidly opened, trade surged, and communication and transportation improved.

Given new market efficiencies and the wide availability of relatively cheap food, the once-common practice of hoarding grains to protect against the kind of shortfall the world is suffering now seemed more archaic. Global grain reserves plunged.

Yet there was one big problem. The global food trade never became the kind of well-oiled machine that has made the price of manufactured goods such as computers and flat-screen TVs increasingly similar worldwide.
3. The come back of the biotech industry

EXTRACTS ONLY from 'The EU's agrofuel folly: policy capture by corporate interests', Briefing paper, Corporate Europe Observatory (CEO), June 2007

Despite growing public concern about the risks associated to agrofuels[1], the European Union (EU) is throwing its weight behind the promotion of these often very harmful crops. In March 2007, a proposal set targets to increase the use of agrofuels in all road transport fuel to 10 percent by 2020. The Commission is also planning to channel large amounts of EU public funds towards the research & development of agrofuel projects.

The EU's agrofuel folly has been influenced by the strong lobbying activities of interested industries, such as car-manufacturers, biotech companies and the oil industry. These industries have forged new alliances with each other and in recent years, have been invited by the European Commission to shape EU policy on agrofuels through several industry-dominated advisory bodies. These include the Advisory Research Council for Biofuels (BIOFRAC), CARS21 and more recently the European Biofuels Technology Platform (EBFTP).

The impacts of this one-sided advice are far-reaching. It has affected how the EU is tackling the fundamental problem of reducing CO2 emissions from road transport. Furthermore, the so-called solution threatens to not only exacerbate the problem it aims to resolve, i.e. climate change, but will also create a range of new insecurities and devastation. It could not be further away from effective policy aimed at energy saving and reduced consumption...

The come back of the biotech industry

The main European biotech lobby group, EuropaBio, was a member of BIOFRAC and is also an active member of the EBFTP. As EuropaBio's secretary general Johan Vanhemelrijck explains "We have worked hard to establish excellent working relations with the Commission and our close involvement with the new Biofuels Technology Platform is one of the fruits of this."[25]

The biotech industry hopes to overcome the fierce public resistance to GM crops, by developing 'improved' crops for agrofuel production. Growing public concern for climate change and the green label that still attaches itself to agrofuel development could offer the biotech 'fix' an opportunity for more PR success that in the past. Genetically engineered crops that are rejected for food, may be more publicly acceptable if they are providing fuel for passenger cars in a way that is promoted as more 'climate friendly'. Messaging from EuropaBio reflects this new discourse. They talk about how biotechnology is 'climate friendly', and more than this it will drive expansion of the global economy, increase wealth while reducing humankind's environmental footprint, reduce dependence on oil imports and provide an income stream for farmers. Their new buzzword is the 'bio-based economy', "a term which encapsulates our vision of a future society no longer wholly dependent on fossil fuels for energy and industrial raw materials... The whole world is now in transition from the Age of Chemistry to the Age of Biotechnology".[26]

Yet, the negative impacts already associated with large-scale monoculture containing genetically engineered crops will be exacerbated by the large expansion of agrofuels. GM contamination is likely to increase and become more complex, when food crops are engineered with traits designed for non-food purposes.[27] Currently, GM crops are mainly for animal feed, and the same corporations that control these crops and inputs for animal feed are the ones set to benefit from their use for agrofuels.

According to Berkeley professor Miguel Altieri and Food First executive director Eric Holt-Gimenez, the agrofuel agenda offers biotech companies like Monsanto "the opportunity to irreversibly convert agriculture to genetically engineered crops. Presently 52% of corn, 89% of soy and 50% of canola in the US is genetically modified (GM)." The authors argue that "the expansion of corn genetically tailored for special ethanol processing plants will remove all practical barriers to the permanent contamination of all non-GMO crops."[28]

In the EU consumer resistance has to a large extent kept GM crops out. With agrofuels, the biotech industry has a chance to gain access by the back door, presenting GM crops as energy crops, not food crops. However, the risks of contamination to non-GM crops remain. For example, Syngenta has applied in Europe for authorisation to import a type of GM maize, named Event 3272, specifically intended for ethanol agrofuels. This maize can help convert itself into ethanol by growing a particular enzyme (which breaks starch into simpler molecules of carbohydrate easing the transformation into ethanol). However, it also contains a marker gene derived from E coli. "Agrofuels: Towards a Reality Check in nine key areas", a recent paper produced by several organisations campaigning on agrofuels, explains how applications for import of this GM maize in the EU and South Africa show that it is expected to contaminate both food and animal feed, as Syngenta has applied for authorisation for both.[29]

Agrofuels are already enhancing the profits of the biotech industry, and the race is on for new GM energy crops. DuPont indicates annual revenues from the global agrofuel markets, largely from agricultural inputs to fuel ethanol of about US$300 million.[30] Last February the company announced a US$100 million reinvestment plan to shorten the time to access the market for new seed products for Pioneer, DuPont's subsidiary. According to Bill Niebur, Vice President for genetics research and development, "Demand for ethanol means that the race is on to rapidly ramp up grain yields."[31] Monsanto is also in the race. The world's largest developer of genetically modified seeds announced recently record profits because of growing ethanol demand.[32] Monsanto will boost seed production capacity this year, planning to spend US$500 million to meet rising corn-seed demand. The biotech industry is also investing heavily in second generation agrofuels, designing special traits for feedstock and investing in the processes to convert feedstock into fuels, using for example, enzymes.