Biofueling Poverty
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

How’s this for a confluence of events? The Wall Street Journal headlines a front-page story on food riots in Egypt, Cameroon, Ivory Coast, Senegal, and Ethiopia. The Senate Finance Committee announces a deal on an agricultural tax package that would provide millions of dollars in tax subsidies for “cellulosic biofuels,” i.e., ethanol. And the White House releases its plans to deliver $200 million in emergency food aid overseas, a fraction of the $2.1 billion America spent on such aid throughout 2007.
The Journal story quoted India’s Finance Minister, Palaniappan Chidambaram, as saying, “When millions of people are going hungry, it’s a crime against humanity that food should be diverted to biofuels.” A crime against humanity implies some nefarious intent, which is absent here. But there is no disputing the results of policymakers’ enthusiastic embracement of ethanol derived from grain and corn as an energy alternative to fossil fuels on underdeveloped nations: it’s fermented a humanitarian crisis.
In the past year, the global price of wheat has risen by 130%, rice by 74%. As a result, 33 countries, according to The World Bank Group, are facing social upheaval because of the dramatic rise in prices. “For these countries,” World Bank President Robert Zoellick said in a speech on April 3, “where food comprises from half to three quarters of consumption, there is no margin for survival.”
Several additional factors that, unfortunately, struck all at once, have caused the alarming rise in the cost of food throughout the world. High oil prices increase the costs of food production and thus the price of food itself. If, as these columns have said, rapidly rising commodity prices are in part the fault of those who have allowed the dollar to fall, then the world’s reserve currency, our very own greenback, also bears some of the blame for the present crisis. Devastatingly bad harvests in Australia and China, and the global prosperity that has increased the demand for meat — animals consume more grain than humans — are blameless forces that have also led us into a dire food crisis.
But the role the politically manufactured boom in biofuels has played strikes us as the one most worthy of emphasis. No one doubts the sincerity of those who want to wean America off its dependence on foreign oil and protect the environment from the damage done by burning fossil fuels. However, in biofuels, environmental advocates have turned to a solution that is worse than fossil fuels regarding carbon emissions, only marginally effective in decreasing foreign oil dependence, introduces other problems that are proving more serious, and costs taxpayers billions of dollars in subsidies.
As a recent report from Oxfam International, “Bio-Fuelling Poverty,” put it, “Biofuel production creates competition for resources with food and other agricultural products.” Given these facts, one would not suppose that it would require a national politician of uncommon bravery or intelligence to express some reservations about biofuels as the answer to all our energy problems. Yet, such reservations are not easily found in Washington. Iowa is an enormous beneficiary of biofuel subsidies. This is not a state any presidential candidate wants to offend. And all Washington politicians covet the good graces of the powerful farmers’ lobby.
As Time magazine reported in March, John McCain, who in 2000 called biofuel subsidies an “outrageous agribusiness boondoggle,” has since called ethanol a “vital alternative energy source.” Senators Clinton and Obama are no less enthusiastic these days. We do not doubt the motives of these politicians — for instance, September 11, 2001, not the concerns of Iowa caucus goers, may have been what changed Mr. McCain’s mind about biofuels. However we do doubt their ability to solve problems that are only amenable to a market solution.
As it is, the American government is spending billions of dollars at home to subsidize ethanol production that drives the worldwide price of corn higher, creating a need for America to spend billions of dollars more alleviating starvation overseas. One needn’t study economics to realize that these measures counteract each other.
We’re not saying that starving Africans should take priority over America’s energy security needs. But the law of unintended consequences is something to keep in mind the next time the politicians decide a law is needed to fix another sector of the American economy. If an energy bill that subsidizes corn production in Iowa can cause bread riots in Egypt, who can image the results when lawmakers get together to “fix” health care or the housing market?