Friday, September 21, 2012

Food Or Fuel?

The French government is moving to do what the US government should have done long ago, which is to stop growing fuel and use the corn as food. Ethanol is a massive government give away to the private sector and it only helps increase food prices. The news bureau of the EU reports changes are coming in Europe.

A French plan to fight food price volatility took further shape yesterday (12 September) with a call to pause global development of biofuels, just a day after President François Hollande pushed for creation of strategic food stocks.

A government spokeswoman, speaking after a cabinet meeting, said France would “push for a pause in the development of biofuels competing with food."

The plan is forming in response to the third global food price spike in four years, this time sparked by the worst US drought in over half a century and persistent dry conditions in other key cereal producing areas that revived memories of unrest from 2007/08's food emergency.

Hollande earlier said he was in talks with other heads of state to launch strategic stockpiles of agricultural commodities, one of the boldest measures yet to tame volatile food prices.

Although it was unclear whether Hollande would succeed in convincing major players such as the United States or China to agree on strategic food stocks, potentially a difficult and costly challenge, Italy has already backed the French initiative.

The biofuels move is in line with a bid by the European Union executive to impose a limit on the use of crop-based biofuels over fears they are less climate-friendly than initially thought and compete with food production, as shown in draft EU legislation seen by Reuters.

The European Commission's plan still needs to be approved by EU government and lawmakers.

Biofuels are made mostly of grains and oilseeds. Prices soared to record highs this year due to drought in the U.S. Midwest and the Black Sea region.

Internally, France already plans to cap at 7% - the current level - the use of crop-based biofuels in fuels, a read-out of a cabinet meeting showed.

The UN Food and Agriculture Organization called last month for a relaunch of the debate on biofuel policies and for a look at ways to make them more flexible to reduce the risk of food crises and stepped up the pressure on the United States to change its biofuel policies.

France's calls to ease so-called first generation biofuels, also widely used in sugar cane-based ethanol in Brazil, is a new sign of the country's efforts to prevent price spikes.

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