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World Bank Report:
Biofuels Cause 75% of Food Inflation

July 4, 2008 (EIRNS)—A secret World Bank report reveals that biofuels are responsible for driving up global food prices by 75%, according to a report in the London Guardian, which obtained a copy of the report. It also refutes the idea that the cause for runaway food prices has anything to do with Indians and Chinese eating too much. The report was not made public, so as not to embarrass the Bush Administration (not to mention almost all Western governments) which claims that biofuels are responsible for less than 3% of food-price rises, said the Guardian. Completed in April, just before the entire food crisis became front-page news, the Guardian's report comes out on the eve of the G8 summit next week in Hokkaido, Japan, where they will most likely make the same lying statements that have been made on biofuels and speculation, as not being responsible for runaway prices.

The report's findings, according to the Guardian, parallel those of the soon-to-be-released Gallagher Report, by the British government, which the Guardian reported on several weeks ago, and which states that biofuels have played a "significant" part in pushing up food prices to record levels. This report should have been released already, suggesting that it, too, is being suppressed.

On the lie that runaway food prices are caused by an improved diet in India and China, the report says: "Rapid income growth in developing countries has not led to large increases in global grain consumption and was not a major factor responsible for the large price increases." It states that even the droughts in Australia have had marginal impact, but rather it is the drive for biofuels by the EU and United States which has had the biggest impact on food supply and prices.

Since April, all gasoline and diesel in Britain has had to include 2.5% complement from biofuels. The EU has been considering raising that target to 10% by 2020. "Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate," says the report. The prices on a basket of food examined in the study rose by 140% between 2002 and February 2008. Estimating that fertilizer prices accounted for an increase of only 15%, it states that biofuels have been responsible for a 75% jump in prices over that period.

The Guardian writes that the report "argues that production of biofuels has distorted food markets in three main ways. First, it has diverted grain away from food for fuel, with over a third of U.S. corn now used to produce ethanol and about half of vegetable oils in the EU going towards the production of bio-diesel. Second, farmers have been encouraged to set land aside for biofuel production. Third, it has sparked financial speculation in grains, driving prices up higher."

Unlike other studies, its author, senior World Bank economist Don Mitchell, undertook a highly detailed month-by-month analysis of the increase in food prices, which revealed the striking impact of biofuels on the price of food and on the food supply.

The Guardian quotes former chief scientist of the British government, Dr. David King as saying, "It is clear that some biofuels have huge impacts on food prices. All we are doing by supporting these is subsidizing higher food prices, while doing nothing to tackle climate change."