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The Controversial World Bank Report on Biofuels

I mentioned it earlier in a post, but now the full text of the World Bank report blaming biofuels for 75% of the rise in food prices has been posted:

A Note on Rising Food Prices

I don’t have time to critique it right now, but wanted to call attention to it since many had questions about how the conclusions were reached. So, you now have access to it.

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July 14, 2008 - Posted by | biofuels, food prices, The Guardian

2 Comments

  1. Every farmer gets caught in a loop of trying to produce as much as possible, and for the last 30 years there has been a continual increase in yields and total production.

    The idiot that published that paper has no clue that the increase in biofuel usage occurred a couple of years prior to “peak yield”. US Corn production increased steadily from about 100bu/acre to 170bu/acre since the 1970’s mostly by 2 things: urea fertilizer and irrigation. There is a hard limit (that has been reached) on yields, but the continual corn surplus held corn (and therefore all other cereals) at a constant price for 30 years.

    Does this guy actually think that the US was going to keep shipping corn for the 1970’s price indefinitely?

    Again: I am not US citizen. I am not a corn farmer. I think corn ethanol was a stupid idea as a fuel. I think that US farm subsidies have sabotaged farming profitability (by causing production above real feasibility) since the mid 1970’s. I think that the unintended consequence of biofuels pushing up grain prices ahead of oil prices is the first real break North American agriculture has seen in 30 years and hopefully if cereal grains stay out of a surplus situation that it will be the end of North American agricultural subsidies and agriculture will actually be profitable for once in my lifetime.

    Comment by Bob Rohatensky | July 14, 2008

  2. I guess when speaking of continual increasing yields that saying urea (nitrogen) fertilizer and irrigation are the major factor is too narrow. Phosphate is probably just as much of a “peak” issue. This is a pretty good paper on world phosphate production and use. Potash has also seen a price spiral. Saskatchewan and Morocco prettymuch have the world supply of potash and phosphate and TOD is talking about Morocco today. NG is also highly used for running irrigation pumps.

    If the World Bank guy thinks that US corn ethanol is a major food problem and that North American farmers should have kept supplying the world with $2 corn and $4 wheat, he is in for a big shock when oil, NG, potash and phosphate price spirals work their way through the system. The ethanol plants will shut down on their own, but don’t expect 1970’s corn prices to come back.

    Comment by Bob Rohatensky | July 14, 2008


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