Today in Biofuels Opinion: “The rush into ethanol has been a serious misstep”

May 29, 2008

Peter Schrum, President of the German Renewable Fuel Association: “In 1980, world prices for grain were on the same level as it is today. Why? Starting in the 1970s, farmers were paid direct payments, minimum prices were guaranteed. Thus, huge amounts of grain surplus produced had to be sold cheaply to the world market, possibly due to export subsidies. Millions of small-scale farmers in developing countries had to bear the brunt. These farmers continued agriculture for their self supply but, because of the very low international grain prices, were unable to realize an adequate sale price for their production surplus. 10 years ago, ministers of the developing world called upon the EU and the USA for a change in agricultural subsidy policy.

About 5 years ago, the EU Commission eventually decided to stop this erroneous development by adjusting agricultural subsidies; minimum prices were abolished and set-aside areas freed for production of energy. At the same time Chinese and Indian economies grew at around 10 % per year, income increased and eating habits changed. It was only a matter of time before grain prices would adjust back to the market equilibrium. Prices of grains and oil seeds jumped up, so that again we have a price level similar to 1980.

Rep. Nick J. Rahall (D-WV), chairman of the House Natural Resources Committee: “The rush into ethanol has been a serious misstep. We had better look carefully before we leap again. Countries around the world are in dangerous states of unrest. Over the course of this year, riots have erupted in such places as Haiti, Yemen, Egypt, Vietnam, Cambodia, Mexico and Morocco. Much of this unrest can be directly linked to food shortages. These food shortages can be largely linked, as the United Nations has stated, to the huge increase in the production of food-based biofuels. And by the way, gas prices are not going down as a result. The solution to America’s dependence on foreign oil will not come from swapping one addiction for another.”

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Written by Jim Lane · Filed Under Opinion