The Absurd Report

Energy: The world’s poor are learning what happens when government subsidizes the burning of food. It’s time to end this madness and let the market decide if any biofuels make sense.

For most Americans, the rising prices at the supermarket are definitely an annoyance, but hardly a threat to life and health. It’s a different story in countries like Haiti, where food inflation has led to real hunger and, last week, to riots.

News reports say the poorest Haitians are trying to get by on cookies made with dirt, vegetable oil and salt. Food riots also have roiled Egypt and led to a general strike in Burkina Faso in West Africa. The high cost of corn, wheat, soybeans and other basics of the world’s diet could soon start bringing down governments.

It already has set back the fight to reduce global poverty. World Bank Chairman Robert Zoellick estimates that “the effect of this food crisis on poverty reduction worldwide is on the order of seven lost years.”

So who or what is to blame? There is no shortage of culprits, natural and man-made. Droughts have cut grain harvests. The global economic boom has raised prices by hiking demand for higher-end food such as beef (it takes a lot of grain to feed cattle) and of food in general. The spike in oil prices has made farming more expensive, from tractor fuel to fertilizer.

Then there’s the biofuels craze, fueled by mandates and subsidies in Europe and the U.S.

In America, the federal government pushes the production of ethanol from corn with a rich mix of tax incentives and protectionism. Refiners get a 51-cent tax credit for every gallon of ethanol they produce and are shielded from cheaper imported ethanol with a 54-cent-a-gallon tariff.

The result, totally by design, is that a huge swath of the U.S. corn crop that would otherwise go to food for people and animals is diverted to ethanol.

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Tags: Energy Policy

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