The original study in 2008 depicted a direct correlation between the spike in prices of food products and the increased global use of biofuels.
The report argued that: “Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate.”
With over a third of US corn siphoned off for the production of biofuels and farmers encouraged to set aside land for the same purpose, the speculation that this may be the cause of “the first real economic crisis of globalisation” looked like a possibility.
Energy prices up - food prices up
However in a recent World Bank report, drawn up by John Baffes, from the World Bank, and Tassos Haniotis, from the European Commisssion, titled Placing the 2006/08 Commodity Price Boom into Perspective (July 2010), the financial institution has seemingly undertaken an ‘about-face’ in position.
This new report concludes that the spike in prices of food products was instead mainly due to the increase of the prices of energy, and to the speculation of the commodities.
Therefore, instead of biofuels causing an increase in food prices of 75% as originally thought, it is now speculated that this form of energy was responsible for a rise of only 1.5%.
Since April, all petrol and diesel in Britain has had to include 2.5% from biofuels. This is expected to rise as an EU target of 10% by 2020 is to be introduced.