UN agency urges review of biofuel policies and subsidies

Concern voiced on food prices

ROME - The United Nations food agency yesterday called for a review of biofuel subsidies and policies, noting that they had contributed significantly to rising food prices and hunger in poor countries.

With policies and subsidies to encourage biofuel production in place in much of the developed world, farmers now often find it more profitable to plant crops for fuel rather than for food, a shift that has helped lead to global food shortages.

Current policies should be "urgently reviewed in order to preserve the goal of world food security, protect poor farmers, promote broad-based rural development and ensure environmental sustainability," said a report released yesterday by Jacques Diouf, executive director of the UN Food and Agriculture Organization.

In releasing the report, the UN joins other environmental groups and prominent international experts who have called for an end to - or at least a serious overhaul of - subsidies for biofuels, which are cleaner, plant-based fuels that can be substituted for oil and gas in some circumstances.

The Organization for Economic Cooperation and Development concluded this summer that government support of biofuel production in OECD countries was hugely expensive and "had a limited impact on reducing greenhouse gases and improving energy security." It did have "a significant impact on world crop prices," the report noted.

"National governments should cease to create new mandates for biofuels and investigate ways to phase them out," the report concluded.

Within the past eight years, as oil prices have risen and concerns about carbon emissions have grown, a number of countries including the United States and some in the European Union have put into place a variety of subsidies and incentives to jump-start the fledgling biofuel industry.

But studies in the past year have concluded that the rush to biofuels has had some disastrous if unintended consequences: less food available to eat in poor countries, skyrocketing global grain prices and a loss of forests as farmers create new fields to join in the biofuel boom.