Tuesday, January 15, 2008

Should cars eat our food?


Should cars eat our food?

The lure of biofuels is difficult to resist. In a country with a surplus of food, it is easy to get carried away with the idea of mixing some agricultural crops with gasoline or diesel in order to save on the oil import bill.

Brazil has proved that mixing oil with sugar cane, corn and soybeans can run most of a country's transportation. In Thailand, some leading industries and increasing numbers of farmers are jumping on the biofuel bandwagon.

But this programme is already affecting supplies and raising prices of food. It is not sinful to fuel autos with the help of renewable crops, as Cuban dictator Fidel Castro claims. But it is unacceptable to make food scarcer and more expensive because of a headlong race by businessmen to make higher profits with such a programme.

Economist Jeffrey Sachs, who studies poverty issues on a macro level, got a lot of publicity by criticising the International Monetary Fund's actions in Thailand in 1997, and lately by criticising Thailand's threats to break international drug patents. He wrote recently that poor people worldwide face a triple threat where global warming raises food prices because crops are turned into fuel.

Mr Sachs, perhaps more than any recent critics, has pointed out the knock-on effects. World wheat prices have recently hit record levels, at least in part because wheat acreage has dropped as North American farmers have switched to corn to make ethanol.

Similar events are already occurring in Thailand. News that palm oil and tapioca (cassava) will be in demand for programmes promoting biofuel has actually changed agricultural patterns _ only a little so far, but measurably. Palm plantations have now been seeded in regions where the crop had seldom been seen. They have replaced some banana farms in the upper South, fruit orchards in the East, and even some rice fields in the Central region. In the past, cassava has driven farmers from rags to riches and back to rags. Now the crop is gaining new life on reports it will be used for biofuel, and fields of tapioca again are sprouting, particularly east of Bangkok.

Even this small amount of crop replacement has caused strong reaction in the markets. Last week, the Internal Trade Department held an emergency meeting with traders to discuss the hoarding and shortage of palm oil, a popular cooking product. This joint government-public meeting agreed to urgently call on the Commerce Ministry to allow the immediate import of 60,000 tonnes of palm oil from Malaysia. That meant a rise in palm oil prices of 15 baht a litre, an unpopular move which nevertheless had to be rubber-stamped by a ministry with no alternatives.

At the same time, the price of many snacks suddenly shot up in markets and supermarkets throughout Thailand. The reason for that was explained as a shortage of cassava. That is the polite way of saying farmers and more importantly warehouses and middlemen are hoarding tapioca in order to get higher prices when biofuel firms and food makers try to outbid each other for the raw material.

The changes in crops and the market pressures for food are extremely controversial under any circumstances. Without public input and government guidance, they are unacceptable. The current, military-appointed government has done little to ensure that the interests of all parties are considered.

Big business, of course, wants to get involved in an industry that is hugely profitable because of taxpayer-funded subsidies for ethanol and bio-diesel. Energy Minister Piyasvasti Amranand last week confirmed the national fuel fund would spend about 500 million baht this month alone supporting bio-diesel. A Khon Kaen sugar merchant said he expected his company's profits to rise 10% this year thanks to the ethanol programme.

A first priority of the next elected government must be to tackle the hugely expensive biofuel projects. They already are costing billions of baht. They also are changing patterns of food production, agricultural research and prices in the marketplace.

It may be that rising oil prices and a thirst for transport will convince Thais to put food in the fuel tanks of automobiles and trucks. But that should happen only after careful scrutiny of the effects of such a decision.

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