The biofuel factor, the food crisis and Ghana

It is now an established fact that the production of biofuel is a major contributor to the current worsening global food crisis. The use of productive agriculture land for the production of crops for ethanol has been identified as a factor that is pushing world food prices up to 75%.

Other factors identified for the crisis include growing populations, shortfall in production, high demand for animal feed and consumption patterns. Climate change and rainfall patterns were also blamed.

Sir James Wolfensohn, former President of the World Bank has identified “a growing middle class in India and China” as one of the factors that have contributed to the food crisis.

This emerging middle class he said demand more food and more resources which are all driving food and fuel prices up.

The middle class in India and China he said is expected to grow to about 1.5 billion in the next 15 years.

The Guardian newspaper in London has published a leaked World Bank report which says biofuels have forced global food prices up by 75% – far more than previously estimated. Indeed, the report is a sharp contradiction of the US government’s claims that biofuel contributes less than 3% to the food crisis.

According to the Guardian, the unpublished report, authored by Don Mitchell, a senior economist at the World Bank, is a detailed, month-by-month analysis of the surge in food prices, and allows much closer examination of the link between biofuels and food supply. There are even suspicions that the report which was completed in April has not yet being published to avoid embarrassing the US government.

The Guardian report says since April, all petrol and diesel in Britain has had to include 2.5% from biofuels. The EU has been considering raising that target to 10% by 2020, but is faced with mounting evidence that that will only push food prices higher.

Early in May this year, the UN’s top adviser on food security, Olivier de Schutter made a scathing criticism against the investments that are being made in biofuel by some countries. In an interview with the BBC, he described the investment in biofuel as “irresponsible” and a “crime against humanity.” He went ahead to call for an immediate freeze of the policy and asked for restrain on investors whose speculation he says is driving food prices higher.

Ghana has not been left out in the biofuel scramble. The country is eagerly investing in biofuel with the help of Brazil, the world’s leading biofuel producing country.

While in Ghana for the United Nations Conference on Trade and Development (UNCTAD XII) meeting in April, 2008, Brazilian President Luiz Inacio Lula da Silva signed an agreement with the Ghana government to grow sugarcane for bio-ethanol in Ghana. During the signing ceremony, da Silva said, “in Ghana we are developing a project that will result in growing 27,000 hectares (of sugarcane) for the production of 150 million litres of ethanol per year that are destined for the Swedish market.”

President da Silva who is encouraging farmers in his country to grow biofuels including sugarcane, castor beans and corn, instead of traditional food crops, says rising fuel prices and not biofuels are responsible for the high cost of food.

The World Bank report meanwhile pointed out that biofuels derived from sugarcane, which Brazil specializes in, have not had any dramatic impact on food prices.

At a World Bank Dialogue Series recently in Accra, Ghana, Arnold McIntyre of the IMF said countries are turning to biofuels in response to current global fuel crisis, adding that by 2005, the US overtook Brazil as the largest producer of ethanol. In the EU, he said, Germany is the largest producer of biofuel.

He moreover said, biofuel production in the US which is corn based, is less cost effective than the sugarcane based in Brazil. He also called for policy change to address biofuel production and suggested that it is necessary to do more research in second generation biofuel production.

Ghana, a developing country, which has about 70% of its population in the rural areas involved in agriculture, ironically imports over 40% of its food needs.

Another interesting angle to Ghana’s agriculture dilemma is the fact that while agriculture contributes nearly 40% to the country’s GDP, only 10% of the national budget is allocated to the sector.

Ghana has the capability to lead a ‘green revolution’ in Africa, in this critical moment, but sadly not much is being done to shore up the agriculture sector. Only about 16% of Ghana’s arable land is used for farming.

And the prices of food have more than doubled in Ghana since the crisis.

Ghanaian food crop farmers need support in the forms of investments in inputs, fertilizer, training and access to markets. These could potentially boost agriculture in the country and contribute to job creation and economic growth.

By Emmanuel K. Dogbevi

Email: [email protected]