The boom in biofuel production contributed directly to record food prices last year and could result in food scarcity emerging as one of the defining economic and political risks of the coming decades.
That is the stark warning from the World Economic Forum's Global Risk 2008 report, released yesterday, which warned that increased demand for biofuels will mean "the dynamics of the energy economy will be introduced into global food markets, dramatically increasing price volatility, particularly of staple foods".
The report claimed that a combination of population growth, climate change and the use of agricultural land to grow fuel crops had driven up prices and left world food reserves dangerously depleted. The price of corn rose 50 per cent during 2007, while wheat prices doubled and global food reserves reached their lowest levels in 25 years.
The WEF warned that the threat of food shortages could intensify if demand for biofuels continues to grow, noting that biofuels are expected to account for up to 30 per cent of the US corn crop by 2010.
It also argued that government subsidies for fuel crops, such as those offered in the US and Europe, meant there were no guarantees the market would address the problem of food shortages. "While global efficiency would best be served by a market determined allocation of crop resources globally to food and biofuels based on price and relative environmental efficiency, concerns over energy security may undermine the attractiveness of global collaboration," the report warned.
The report will be seen as another blow to the global biofuel industry which has faced a steady stream of criticism over the past year for failing to deliver promised carbon emission savings and being overly reliant on government handouts.
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