April 17, 2008

The crisis is global and the culprit is the stupid energy policy among other factors

The international media are at it again. A light of a world wide famine beaconing, which is a favorite topic for any media professional. You will see picture galleries full of hungry people fighting for food, skinny children waiting for help makes any journalistic work easy. ABC News terms the recent food riots around the world as an apocalyptic warning predicting hundreds of thousands of starving people in Asia and Africa. The World Bank announces “the world is moving towards a food crisis that may lead to wars and riots”.

What I fail to understand is why it took so long to raise the alarm? Many are trying to find out the cause of the recent crisis.

I recently wrote on the recent price rise of rice in Bangladesh and its impacts. Shortage in production and increasing demands have been sighted as the problems. There are also a list of problems and solutions that looks so complex and harder to achieve in a short time.

And some are terming it as subprime food crisis as surging oil prices made US dollar got weak leading to the subprime loan crisis making worldwide imports (in US Dollars) costlier.

According to a recent report of the World Bank names Western investment in biofuels as the cause of the drastic rise in prices for corn, rice, and other staples.
Concerns over oil prices, energy security and climate change have prompted governments to take a more proactive stance towards encouraging production and use of bio-fuels. This has led to increased demand for bio-fuel raw materials, such as wheat, soy, maize and palm oil, and increased competition for cropland.

Outside The Beltway comments:
It has long struck me as wrongheaded, if not immoral, to take cheap, efficient sources of nutrition to turn them into expensive, inefficient fuels. A gallon of ethanol produces roughly two-thirds the energy of a gallon of gasoline and is far more expensive. And, while farmers and, especially, processors make more money by the increased demand for biofuels, it means that food is now out of reach for millions.
Ronald Bailey tells about this stupid energy policy:
Politicians in both the United States and the European Union are mandating that vast quantities of food be turned into fuel as they chase the chimera of "energy independence."...The result of these mandates is that about 100 million tons of grain will be transformed this year into fuel, drawing down global grain stocks to their lowest levels in decades. Keep in mind that 100 million tons of grain is enough to feed nearly 450 million people for a year.
Dennis Avery from the Hudson Institute says "Biofuels are purely and simply the biggest Green mistake we've ever made and we're still making it." So Bio fuel mandates must go.


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