Food prices are rising in Europe because it has been too hot and has not rained enough, but also because farmland is increasingly being used for biofuels instead of food production, writes Hans-Werner Sinn, President of the Institute for Economic Research (IFO) and Professor of Economics and Finance at the University of Munich.
The 16 October paper remarks that oil pressed from rape seed can be used as diesel fuel and ethanol from maize or sugar beets can replace petrol, and speculates that food prices may one day be coupled to energy prices.
The author believes that current German environmental policy is “deficient” as it seeks to reduce the greenhouse effect by promoting biofuels, and cites the Mexican situation, where the price of maize has more than doubled in the space of a year due to its increased production for use as bioethanol.
Sinn claims that until it is made clear where the extra land to be used for production will come from, “it is hard to see the logic in the promotion of biofuels”.
He outlines three ways of procuring land to cultivate biofuels: “Firstly, land can be withdrawn from the production of food. Secondly, from the production of natural materials, wood in particular. And thirdly from nature.”
There is no surplus food production on a global scale, so withdrawing land from producing food in order to grow biofuels “cannot be done with a clear conscience”, states Sinn. Moreover, it increases food prices.
Similarly, the cultivation of biofuels on land that would otherwise be used for construction material drives up the price of wood, thus encouraging the use of more concrete and steel, which “does not help the environment”.
Moreover, Sinn is concerned that increased biofuels production may not lead the oil sheikhs to extract less oil than they would otherwise have done. Thus the environmental benefit would be negligible, and even negative, especially if it leads to deforestation as natural land (which is usually wooded) is taken over for the production of biofuels, reducing biomass and increasing the amount of CO2 in the air.
Sinn concludes that “it makes little sense to take land in whatever form and use it for the production of biofuels”, and adds that their production is only justified in environmental and social terms if they can be produced without the use of additional land.