The production of bio-fuel as an alternate source of energy may be the main reason behind high food prices in the international market, Business Recorder has learnt. There are two schools of thought on this issued with one favouring this view and saying that bio fuels have forced food prices globally up by 75 percent.
The other camp opposed this opinion, saying that the increasing world population, less investments in Research and Development (R&D) and global trade liberalisation are the main factors behind the increase in prices.
The doubling of food prices for the last two years has already pushed 100 million people into poverty. Developed countries have started the bio-fuels boom to gain renewable fuel production. These fuels will cater to 5.75 percent of Europe's transport needs by 2010 and 10 percent by 2020, while the United States wants 35 billion gallons of bio-fuels a year. Over the last two years, venture capital investment in bio fuels has increased by 800 percent.
Those blaming the increased use of bio-fuels for the surge in food prices are a challenge for the US government, which claims that plant-derived fuels contributed less than 3 percent to the food price rise. In order to reduce the emissions of greenhouse gases, Europe and USA have already turned to plant-derived fuels.
This school of thought has been derived after a secret report by the World Bank's contents became known. The report says that "without the increase in bio fuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate". The report shows that the production of bio-fuels has fainted the food markets, as more than a third of US corn is now being used to produce ethanol while roughly half of vegetable oils in the EU are going towards bio fuels production.
The contrasting view emphasises that the global population is rising by 87 million people a year whereas climate change has started hitting food producers hard, leading to a drop in global grain supplies to their lowest levels this year. On the other hand, according to the second school of thought, most of the countries in the world are investing less in R&D and this is having a negative impact on the production and income of their farmers. Moreover, they say that global trade liberalisation is raising world prices of staple food items by around 5 percent.