Policy recommendations

  • The European Union must ensure that its Energy Policy will not harm the food security of the urban and rural poor in developing countries, whose daily survival is threatened by substantially higher food prices. It should draw up a strategy to ensure the urban and rural poor are compensated for higher food prices before installing mandatory levels of biofuels;
  • The European Union should abolish its domestic subsidies and import tariffs for biofuels, in order to allow developing countries to profit from the trade opportunities biofuels offer;
  • The European Union should draw up comprehensive sustainability criteria for biofuels, including more ambitious standards for greenhouse-gas reduction a slight decrease of emissions as compared to fossil fuels is simply not enough and the protection of biodiversity and carbon-rich ecosystems;
  • The European Commission should include social criteria in its review of the Biofuels Directive to guarantee that the rural populations who live off marginal lands and forests are not hurt by expanding agricultural production;
  • The European Union should stimulate local processing and the use of sustainable biofuels in developing countries. Small-scale farmer cooperatives should be stimulated to prevent the benefits from biofuel production from only falling into the hands of large-plantation owners.

Case: Biofuels

26-06-2008 Written question MEP Karim : The influence of biofuels policy on soaring food prices

26 June 2008

In a written question MEP Sajjad Karim (PPE-DE) asked the Commission if the demand for basic food staples for the production of biofuels has influenced the food prices and if it therefore reconsiders its supportive policy on biofuels production.

People in developing countries generally spend 50 to 80 per cent of their budget on food. Soaring food prices caused by the sudden rush to biofuels represent a profound tragedy for these urban and rural poor. Competition between food and energy will inflate basic food prices anywhere between 20 and 50 per cent in the next ten years, according to estimates by the FAO and the OECD6. This would mean that the number of food-insecure people in the world would nearly double by 2015, instead of being halved as formulated in the first Millennium Development Goal [i] Fair Politics EU urges that the efforts of the EU to secure its energy supply, while subsidizing its agriculture, should not go at the expense of its environmental and development objectives.

Fair Politics EU monitors the efforts made by MEPs to address Policy Coherence for Development in their daily work. The question of MEP Karim to the Commission underlines the coherency between biofuels and development policies and emphasizes the interests of developing countries in them. He urges the Commission to be more coherent in its actions. By doing so, MEP Karim holds the Commission to its commitments in terms of policy coherence for development. For this action, MEP Sajjad Karim was awarded a coherence star.

Full question of Mr. Sajjad Karim can be read below

WRITTEN QUESTION P-2604/08
by Sajjad Karim (PPE-DE)
to the Commission
Subject: Soaring food prices and biofuels
Date: 24 April 2008

Prices of most agricultural food commodities have risen sharply during the past two years. Several factors have contributed to this development:  

1.            low levels of world stocks (especially for wheat and maize) following two years of below-average harvests in Europe in 2006 and 2007;

2.            crop failures in major producing countries like Australia in 2006 and 2007;

3.            rapidly growing demand for grain-based biofuels production supported by subsidies;

4.            gradual changes in agricultural policies of the OECD countries, where reduced levels of subsidies have led to lower surplus production;

5.            strong economic growth in developing countries and expanding world population.

In addition, agricultural markets are becoming increasingly intertwined with non-agricultural markets (energy, manufacturing, finance, etc.). Climate change and resource constraints (water supply in particular) are also influencing overall food supply and demand.

Biofuels tend to allocate resources (e.g. land, labour, capital) away from the production of food crops into the production of feedstocks for biofuels. Biofuels may reduce the availability of food for nutritional use, because ‘effective’ demand for grains, sugar or oils and other basic food staples as feedstock for fuel production is able to outbid that for food.

Does the Commission think that this new source of demand has been playing an important role in influencing prices? Does the Commission intend to reconsider its supportive policy on biofuels production?

P-2604/08

Answer by Fischer Boel

On behalf of the Commission

Date: 11 June 2008

The recent increase in food prices has little to do with EU biofuels production and demand. The amount of raw materials used by the EU for biofuel production is too modest to have had a significant impact on prices of the main agricultural raw materials in general. For instance, in 2007 the EU used less than 1 % of the total EU cereal output for bioethanol production and 5 % of the global vegetable oil output for biodiesel production. In contrast, the proactive policy pursued by the United States (US) has had a noticeable impact on the maize market, but so far has remained a relatively moderate contributor to high food prices in general. The factors that have chiefly affected the prices of the agricultural, and non-agricultural, commodities are those mentioned in the question, together with a sharp increase in oil prices and depreciation of the US dollar.

As regards the future impact of the EU biofuel 10 % target, the analysis carried out by the Commission points to an overall moderate medium-term increase in agricultural commodity prices. You can find the details of the analysis ‘The impact of a minimum 10 % obligation for biofuel use in the EU‑27 in 2020 on agricultural markets’ in the following website.//

The findings of this Commission's analysis are rather close to those provided in most recent Organisation for Economic Cooperation and Development- Food and Agriculture Organisation (OECD‑FAO) studies. The main differences are due to different assumptions made in the simulation scenarios. In the light of these results, the Commission expects that the gradual and balanced EU biofuel policy will leave sufficient time for agriculture to adjust and technology to develop, in particular so-called second generation biofuels, so as to avoid negative impact on the food market. Nonetheless, the directive proposal commits the Commission to closely monitor and assess the impacts, among others, on food prices and food security and to take, if needed, corrective actions.

More information?

Visit the website of the European Parliament

Visit the website of MEP Sajjad Karim

 

Notes
[i] C. Ford Runge and B. Senauer, “How Biofuels Could Starve the Poor” Foreign Affairs (May/June 2007).