[tt] biofuels are stupid, XVIII

[Eugen Leitl]

(How very unexpected).

http://www.nytimes.com/2008/01/19/business/worldbusiness/19palmoil.html?ei=5087&em=&en=0428f9e64240cc22&ex=1200978000&pagewanted=print

January 19, 2008

The Food Chain

A New, Global Oil Quandary: Costly Fuel Means Costly Calories

By KEITH BRADSHER

KUANTAN, Malaysia — Rising prices for cooking oil are forcing residents of
Asia’s largest slum, in Mumbai, India, to ration every drop. Bakeries in the
United States are fretting over higher shortening costs. And here in
Malaysia, brand-new factories built to convert vegetable oil into diesel sit
idle, their owners unable to afford the raw material.

This is the other oil shock. From India to Indiana, shortages and soaring
prices for palm oil, soybean oil and many other types of vegetable oils are
the latest, most striking example of a developing global problem: costly
food.

The food price index of the Food and Agriculture Organization of the United
Nations, based on export prices for 60 internationally traded foodstuffs,
climbed 37 percent last year. That was on top of a 14 percent increase in
2006, and the trend has accelerated this winter.

In some poor countries, desperation is taking hold. Just in the last week,
protests have erupted in Pakistan over wheat shortages, and in Indonesia over
soybean shortages. Egypt has banned rice exports to keep food at home, and
China has put price controls on cooking oil, grain, meat, milk and eggs.

According to the F.A.O., food riots have erupted in recent months in Guinea,
Mauritania, Mexico, Morocco, Senegal, Uzbekistan and Yemen.

“The urban poor, the rural landless and small and marginal farmers stand to
lose,” said He Changchui, the agency’s chief representative for Asia and the
Pacific.

A startling change is unfolding in the world’s food markets. Soaring fuel
prices have altered the equation for growing food and transporting it across
the globe. Huge demand for biofuels has created tension between using land to
produce fuel and using it for food.

A growing middle class in the developing world is demanding more protein,
from pork and hamburgers to chicken and ice cream. And all this is happening
even as global climate change may be starting to make it harder to grow food
in some of the places best equipped to do so, like Australia.

In the last few years, world demand for crops and meat has been rising
sharply. It remains an open question how and when the supply will catch up.
For the foreseeable future, that probably means higher prices at the grocery
store and fatter paychecks for farmers of major crops like corn, wheat and
soybeans.

There may be worse inflation to come. Food experts say steep increases in
commodity prices have not fully made their way to street stalls in the
developing world or supermarkets in the West.

Governments in many poor countries have tried to respond by stepping up food
subsidies, imposing or tightening price controls, restricting exports and
cutting food import duties.

These temporary measures are already breaking down. Across Southeast Asia,
for example, families have been hoarding palm oil. Smugglers have been
bidding up prices as they move the oil from more subsidized markets, like
Malaysia’s, to less subsidized markets, like Singapore’s.

No category of food prices has risen as quickly this winter as so-called
edible oils — with sometimes tragic results. When a Carrefour store in
Chongqing, China, announced a limited-time cooking oil promotion in November,
a stampede of would-be buyers left 3 people dead and 31 injured.

Cooking oil may seem a trifling expense in the West. But in the developing
world, cooking oil is an important source of calories and represents one of
the biggest cash outlays for poor families, which grow much of their own food
but have to buy oil in which to cook it.

Few crops illustrate the emerging problems in the global food chain as well
as palm oil, a vital commodity in much of the world and particularly Asia.