Acquitted! UK report exonerates biofuels for 2008 price spikes; says World Bank, UN, IMF reports "made unrealistic or inconsistent assumptions."
In the UK, a government report from the Department of Environment, Food and Rural Affairs has concluded that “[All] available evidence suggests that biofuels had a relatively small contribution to the 2008 spike in agricultural commodity prices. Whilst commodity prices have fallen steeply from their peaks in 2008 biofuel demand has remained steady – indicating that the causal link from biofuel demand to short-term crop prices is still relatively weak.”
The report determined that speculators responding to rapidly declining global wheat stocks caused by ongoing draught originally triggered the crisis. Furthermore, countries that panicked and imposed export restrictions on grains drove prices even higher, thereby exacerbating the situation. The simultaneous spike in crude oil prices to record levels put upward price pressure on all commodities making the food crisis a truly global event.
“Fuel and fertiliser accounts for over half of operating costs of crop farms but many commentators ignored oil’s ongoing importance as an input into agricultural production,” the UK report concluded. It also criticized “2008 reports from the UN, World Bank and International Monetary Fund, who weighed into this debate in 2008 saying, “studies which have found a large biofuel impact across agricultural commodities have often considered too few variables, relied on statistical associations or made unrealistic or inconsistent assumptions.”
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Category: International, Research
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