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THE
International Food Policy Research Institute (Ifpri) has
practically assured the United States Senate that prices
of key food crops such as maize and sugar would drop
significantly if a moratorium on biofuel production were
implemented immediately.
In his
testimony at a hearing of the Committee on Homeland
Security and Governmental Affairs, Ifpri’s Mark
Rosegrant estimated that corn prices will go down by 20
percent, cassava by 14 percent, sugar by 11 percent and
wheat by 8 percent in two years after the moratorium.
“If biofuel demand from food crops were abolished after
2007, prices of key food crops would drop more
significantly.”
Freezing
biofuel production at 2007 levels for all countries and
for all crops used as feedstock would lead to maize
prices declining 6 percent by 2010 and 14 percent by
2015. Smaller price reductions are also expected for oil
crops, cassava, wheat and sugar, he added.
“Various
pressures on international grain markets have
contributed to the rapid price increases during the past
several years, and biofuels have been just one
contributor, albeit a major one,” said Rosegrant.
The
institute also noted that slowing supply growth and
rapidly growing demand for grain for all uses, made
worse by policy-induced distortions, are long-term
underlying factors that cannot easily be reversed.
“If the
current biofuel expansion continues, calorie
availability in developing countries is expected to grow
more slowly; and the number of malnourished children is
projected to increase even though agricultural value
added in these regions would also accelerate as a result
of higher farm incomes,” said Ifpri.
“It is,
therefore, important to find ways to keep biofuels from
worsening the food-price crisis. In the short run,
removal of ethanol-blending mandates and subsidies and
ethanol import tariffs; and in the United States,
together with removal of policies in Europe promoting
biofuels, would contribute to lower food prices.”
For the
longer term, Rosegrant said it is more critical to focus
on increasing agricultural productivity growth and
improving developing-country policies and infrastructure
related to the storage, distribution and marketing of
food.
To
arrive at an estimate on the impact of biofuel
production on prices, the institute used its IMPACT
model (International Model for Policy Analysis of
Agricultural Commodities and Trade), a
partial-equilibrium modeling framework that captures the
interactions among agricultural commodity supply, demand
and trade for 115 countries and the world. IMPACT
includes demand for food, feed, biofuel feedstock and
other uses. |
