The Telegraph
Saturday , April 16 , 2011
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World Bank wary of biofuel rule impact
Robert Zoellick

Washington, April 15: The World Bank has called for the relaxation of laws requiring crops to be blended into petrol, saying that they are contributing to the global food price crisis.

Robert Zoellick, the president of the Bank, said on Thursday that a “toxic brew” of higher food and fuel costs was heightening popular unrest in regions such as West Asia and North Africa and condemning millions more to poverty.

Among the many causes of high food prices are rules in countries such as the United States that require a certain percentage of petrol to come from corn-based ethanol.

Some 31 per cent of the corn produced in the US in 2008 was turned into ethanol, and government forecasts show that this will hit 40 per cent this year.

Biofuels have been a cornerstone of American attempts to reduce its dependence on imports of oil from West Asia and elsewhere.

Hassan Zaman, a World Bank economist, said although the bank was not advocating the abolition of these laws, it believes that they should be relaxed when food prices surge beyond certain thresholds.

The World Bank also urged governments to spurn restrictions on exports of grains, bolster supplies of information on food stocks and build on the $7 billion (£4.3 billion) a year that the Bank is investing in agricultural production and irrigation.

An increase of only 10 per cent in the World Bank’s food price index could propel another ten million people into “extreme poverty”, where they live on less than $1.25 a day, Zoellick said as he opened at the spring meetings of the Bank and the International Monetary Fund.

“Mix in price gyrations and then stir in higher fuel costs, and you get a toxic brew causing real pain and contributing to social unrest,” Zoellick added.

Luc Lampriere of Oxfam said, “Immediate action must be taken to address underlying factors driving food prices and volatility, which are excessive speculation and demand for biofuels.”

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