From the June 16, 2008 issue of Canadian Business magazine
U.S. President George W. Bush recently sparked an international fight over fat, after attributing global inflation in food prices to Indians’ eating more. “There are 350 million people in India who are classified as middle class. When you start getting wealth, you start demanding better nutrition and better food,” Bush said during a question-and-answer session in Missouri on May 2. “Demand is high, and that causes the price to go up.”
On one point, Bush is right. According to a World Bank report released April 9, food prices have risen 83% in the past three years. That has provoked riots in Asia, price controls on tortillas in Mexico, and rationing of rice sales in the U.S.
Pradeep S. Mehta, secretary general of the Consumer Unity & Trust Society International, a think-tank in India, quickly weighed in with his own analysis. The food problem has “clearly” been created by Americans: they consume 50% more calories than Indians do, he told the International Herald Tribune on May 12. If Americans were more the size of an average middle-class Indian, he added, “many hungry people in sub-Saharan Africa would find food on their plates.”
To imply that tubby Americans or ravenous Indians chowing their way up the food chain are somehow responsible for inflation on the scale we now see is absurd. However, the Bush versus Mehta fight illustrates a larger point. Policy-makers need to think more intelligently about food and energy policies, particularly the notion underpinning biofuel policy — that farmland should be used to grow fuel. Both the International Monetary Fund and the World Bank have published reports that single out biofuel policies as culprits in the spike in food prices. In April, an expert panel commissioned by the European Union to study the issue called for the EU to freeze its 10% biofuel quota “immediately.”
In Canada, we’re marching in precisely the opposite direction. The federal Conservatives plan to spend $2.2 billion promoting biofuels over the next nine years. Meanwhile, parliamentarians debate Bill C-33, legislation that would mandate 5% biofuel in gasoline in Canada from 2010. It sailed through a first vote on May 1, with support from the Bloc and the Liberals. It awaits a final vote and Senate approval. Before it gets there, though, policy-makers should stop to consider whether enshrining demand for biofuels in law is any smarter than Bush’s fat fight.
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