World Bank report blames rising food prices on biofuels

An internal World Bank report finds that the recent rise in food prices is primarily due to the use of crops such as corn for fuel:

"Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate," says the report. The basket of food prices examined in the study rose by 140% between 2002 and this February. The report estimates that higher energy and fertiliser prices accounted for an increase of only 15%, while biofuels have been responsible for a 75% jump over that period.

It argues that production of biofuels has distorted food markets in three main ways. First, it has diverted grain away from food for fuel, with over a third of US corn now used to produce ethanol and about half of vegetable oils in the EU going towards the production of biodiesel. Second, farmers have been encouraged to set land aside for biofuel production. Third, it has sparked financial speculation in grains, driving prices up higher.

The Bush administration has argued that as little as 3% of the rise in prices is due to corn ethanol and other biofuels.

(Thanks for the tip, Jack!)