Food vs. fuel

Food versus fuel is the dilemma regarding the risk of diverting farmland or crops for biofuels production to the detriment of the food supply. The biofuel and food price debate involves wide-ranging views and is a long-standing, controversial one in the literature.^[1][2][3][4] There is disagreement about the significance of the issue, what is causing it, and what can or should be done to remedy the situation. This complexity and uncertainty are due to the large number of impacts and feedback loops that can positively or negatively affect the price system. Moreover, the relative strengths of these positive and negative impacts vary in the short and long terms, and involve delayed effects. The academic side of the debate is also blurred by the use of different economic models and competing forms of statistical analysis.^[5]

Biofuel production has increased in recent years. Some commodities, like maize (corn), sugar cane or vegetable oil can be used either as food, feed, or to make biofuels. For example, since 2006, a portion of land that was also formerly used to grow food crops in the United States is now used to grow corn for biofuels, and a larger share of corn is destined for ethanol production, reaching 25% in 2007.^[6] Oil price increases since 2003, the desire to reduce oil dependency, and the need to reduce greenhouse gas emissions from transportation have together increased global demand for biofuels. Increased demand tends to improve financial returns on production, making biofuel more profitable and attractive than food production. This, in turn, leads to greater resource inputs to biofuel production, with correspondingly reduced resources put towards the production of food. Global food security issues may result from such economic disincentives to large-scale agricultural food production. There is, in addition, potential for the destruction of habitats with increasing pressure to convert land use to agriculture, for the production of biofuel.^[7] Environmental groups have raised concerns about these potential harms for some years,^{[8][9][10][11]} but the issues drew widespread attention worldwide due to the 2007–2008 world food price crisis.

Second-generation biofuels could potentially provide solutions to these negative effects. For example, they may allow for combined farming for food and fuel, and electricity could be generated simultaneously.^[12] This could be especially beneficial for developing countries and rural areas in developed countries.^[13] Some research suggests that biofuel production can be significantly increased without the need for increased acreage.^[14][15][16]

Biofuels are not a new phenomenon. Before industrialisation, horses were the primary (and probably the secondary) source of power for transportation and physical work, requiring food. The growing of crops for horses (typically oats) to carry out physical work is comparable to the growing of crops for biofuels used in engines. However, the earlier, pre-industrial "biofuel" crops were at smaller scale.

Brazil has been considered to have the world's first sustainable biofuels economy,^[17][18][19] and its government claims Brazil's sugar cane-based ethanol industry did not contribute to the 2008 food crisis.^[19][20] A World Bank policy research working paper released in July 2008^[21] concluded that "large increases in biofuel production in the United States and Europe are the main reason behind the steep rise in global food prices" and also stated that "Brazil's sugar-based ethanol did not push food prices appreciably higher.".^[22][23] However, a 2010 study also by the World Bank concluded that their previous study may have overestimated the contribution of biofuel production, as "the effect of biofuels on food prices has not been as large as originally thought, but that the use of commodities by financial investors (the so-called "financialization of commodities") may have been partly responsible for the 2007/08 spike."^[24] A 2008 independent study by the OECD also found that the impact of biofuels on food prices are much smaller.^[25]