Why 25% of your income could soon go on food

The OECD is the latest voice amongst the clamour questioning the expansion of biofuels. The rush to promote such fuels - along with growing levels of protectionism - looks set to push food prices sky-high.

The OECD has joined the growing chorus of voices questioning the expansion of biofuels with the publication of a report that says the rush to promote these fuels is pushing up food prices and damaging the environment. A July report from the UN Food and Agriculture Organisation said much the same thing.

The Bush administration's subsidies for corn-based ethanol have already diverted much of the US crop from food to fuel production, said Martin Hutchinson on Breakingviews. But there are other reasons for rising food prices. When corn prices rose early this year, the Mexican government put a price ceiling on their food staple, tortillas. Such price controls, common in poor countries, "stunt the development of domestic agriculture". Rich countries, such as the US, Europe and Japan, make things worse with protectionist trade barriers that block commodity imports from countries that "could run bigger surpluses". And we're not just talking about food imports. Biofuels can be more efficiently produced in tropical regions too, which is why the OECD has called for these tariffs to be lifted.

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