WP_Post Object
(
    [ID] => 4292
    [post_author] => 28821
    [post_date] => 2007-10-15 23:02:40
    [post_date_gmt] => 2007-10-15 22:02:40
    [post_content] => The recent Nobel-prize award shared by Al Gore and the UNO scientists dealing with global-warming questions has just strengthened  the process of taking this issue to one of the first places in the global agenda. It has been frequently discussed whether global warming really deserves of priority over other important issues such a poverty or international trade. But less attention has been paid to the fact that an inadequate response to those environmental challenges could even do more harm than good. This might be the case of the growth in the use of agricultural commodities as a feedstock to a rapidly increasing and “green” biofuel industry. Until now, some of the results of this industry have been significant public subsidies, inefficient fuels and, more importantly, unprecedented price tensions in the agricultural markets, which have fed (or maybe fueled?) global inflation. As the FAO has reckoned in a recent report (OECD-FAO Agricultural Outlook 2007-2016), the increasing price of agricultural commodities is a particular concern for net-food-importing developing countries and for poor urban populations, as well as for producers that use those commodities to feed their animals.


Has the price impact really been so big? Well, the wheat sub-index of the Dow Jones commodity index shows a price increase of almost 100% since 2006, much more than the already impressive 48% performed by the industrial-metals index. Although there are also temporary reasons for price increases, such as droughts and low stocks, the structural role of the biofuel industry is undeniable. In 1984, only 0,5% of the US corn production was dedicated to biofuels; the figure jumped to 11% in 2004; and this year it can more than double to 25%. The FAO expects that US ethanol production out of corn also doubles in the 2006-2016 period. It was corn the commodity whose price jumped first, but as more and more resources were dedicated to its production, wheat took the lead.

This squeeze on agricultural resources happens at a time when great economic progress in developing countries like China and India is helping millions of people to leave poverty and, consequently, to consume more food. This increase in demand uses to focus on meat, rather than cereals, but the fact is that each gram of cow meat needs seven grams of cereals to be produced. Inflation rates are already threatening in these countries. Does it make sense to develop a global and inefficient biofuel industry at the expenses of basic agricultural goods? Is a wrongly designed fight against global warming just supporting global poverty?


    [post_title] => Global warming vs global starving?
    [post_excerpt] => 

    [post_status] => publish
    [comment_status] => open
    [ping_status] => closed
    [post_password] => 
    [post_name] => global_warming_1
    [to_ping] => 
    [pinged] => 
    [post_modified] => 2023-12-13 13:42:56
    [post_modified_gmt] => 2023-12-13 12:42:56
    [post_content_filtered] => 
    [post_parent] => 0
    [guid] => https://economy.blogs.ie.edu/archives/2007/10/global_warming_1.php
    [menu_order] => 0
    [post_type] => post
    [post_mime_type] => 
    [comment_count] => 3
    [filter] => raw
)

The recent Nobel-prize award shared by Al Gore and the UNO scientists dealing with global-warming questions has just strengthened the process of taking this issue to one of the first places in the global agenda. It has been frequently discussed whether global warming really deserves of priority over other important issues such a poverty or international trade. But less attention has been paid to the fact that an inadequate response to those environmental challenges could even do more harm than good. This might be the case of the growth in the use of agricultural commodities as a feedstock to a rapidly increasing and “green” biofuel industry. Until now, some of the results of this industry have been significant public subsidies, inefficient fuels and, more importantly, unprecedented price tensions in the agricultural markets, which have fed (or maybe fueled?) global inflation. As the FAO has reckoned in a recent report (OECD-FAO Agricultural Outlook 2007-2016), the increasing price of agricultural commodities is a particular concern for net-food-importing developing countries and for poor urban populations, as well as for producers that use those commodities to feed their animals.

Has the price impact really been so big? Well, the wheat sub-index of the Dow Jones commodity index shows a price increase of almost 100% since 2006, much more than the already impressive 48% performed by the industrial-metals index. Although there are also temporary reasons for price increases, such as droughts and low stocks, the structural role of the biofuel industry is undeniable. In 1984, only 0,5% of the US corn production was dedicated to biofuels; the figure jumped to 11% in 2004; and this year it can more than double to 25%. The FAO expects that US ethanol production out of corn also doubles in the 2006-2016 period. It was corn the commodity whose price jumped first, but as more and more resources were dedicated to its production, wheat took the lead.

This squeeze on agricultural resources happens at a time when great economic progress in developing countries like China and India is helping millions of people to leave poverty and, consequently, to consume more food. This increase in demand uses to focus on meat, rather than cereals, but the fact is that each gram of cow meat needs seven grams of cereals to be produced. Inflation rates are already threatening in these countries. Does it make sense to develop a global and inefficient biofuel industry at the expenses of basic agricultural goods? Is a wrongly designed fight against global warming just supporting global poverty?