Global Food Crisis: The Struggle Between Biofuel and Famine

In a previous entry entitled, "Redirecting India's Economy: Shifting Dependence from a Service-Based Economy," I explored the blogosphere to discover the new developments in India being debated while leaving my personal comments and questions to contribute to the discourse. This week, I have decided to blog about the intensifying topic of the global food crisis (see graphic, right) that is making headlines across the world. The major debate takes place as an international financial crisis has led to rising commodity prices, which have inflated food prices to levels unaffordable for the rural poor in underdeveloped countries that exist on less than $1 a day. To better understand the gravity of this situation, statistics report that the world experienced a 181% increase in global wheat prices with a 83% rise in overall global food prices over the thirty six months leading up to February 2008. In fact, the World Bank is meeting today to discuss an international plan proposed to reduce hunger by providing food aid to desperate people. Meanwhile, more economists are pointing to the surge in biofuel production as the principle, preventable culprit in rising food costs. In an effort to combat global warming, biofuel has become big business in countries looking to reduce their dependence on foreign oil. Incentives through government subsidies have sparked the allocation of domestic agriculture towards the production of biofuels, such as ethanol and biodiesel. The tradeoff of utilizing the crop for fuel instead of its traditional purpose as a food source has contributed to the higher global food prices, which have resulted in violent protests from Brazil to Egypt. As a daily reader of international news that analyzes the effects of events on the BRIC nations, I became attracted to this debate and chose to offer my personal thoughts on two highly regarded blogs. The first post I commented on, Biofuels: A Threat and a Cause of World Hunger is written by Maggie Thornton, a professional journalist who produces daily entries on the Maggie's Notebook blog. While she only addresses biofuel production as the root problem to world famine, I found a second external post entitled, Left’s Favorite Economist Paul Krugman: Biofuels Are A Scam, which provides a diversified set of reasons that have created this global hunger. Published by Iraq war veteran, Pat Dollard, on the Pat Dollard blog, this entry originates from an excerpt taken from an opinions article written by the reputable economist, Paul Krugman, of the New York Times. In addition to publishing my comments directly on the authors’ respective blogs, I have also posted these comments below.

"Biofuels: A Threat and a Cause of World Hunger"
Comment:
Thank you for a concisely constructed post on the evil effects of biofuel production on global famine. You clearly have conducted extensive research and gathered relevant quotes to support your argument against biofuels. I believe the unique structure of your entry, which incorporates passages from various secondary sources, is an effective method to engage your readers. By providing extracts from these external websites, which you justify and support with your own opinion, the readers are presented with a multitude of viewpoints on which they can accept or reject on their own discretion. For example, you take excellent snippets of information from the NY Times and the UK Telegraph which validate the credibility in your underlying argument. Having read other articles regarding this topic, I was pleasantly surprised to witness a fellow blogger lambasting an American biodiesel company and the hypocrisy of former vice president, Al Gore. I agree with your remark that in both cases, it is all about the money. Despite asserting to be an environmentally friendly company and compensating his own carbon footstep by unscrupulously purchasing carbon credits respectively, you accurately disprove their illegitimate claims. Given the ulterior motive of money that seems to be a common theme amongst governments and politicians around the world, what do you think should be done to provide greater transparency in political decision making? It is a sad reality that most Americans are not even aware of the negative effects of biofuel production (see image, left), such as starvation in developing countries, which is why I am glad that this crisis has found itself in the headlines of news media around the world lately. Overall, this is a strong post that addresses critical issues, but could benefit from the following suggestion. Although your first excerpt from the NY Times does mention both rising energy costs and a growing middle class in India and China as forces accounting for increasing food prices, you did not personally elaborate on these alternative causes nor did you consider any additional reasons, such as droughts and poor political policies. I feel your post could have been even stronger if you identified these factors, instead of solely focusing on biofuel production as the primary culprit. At this point in time, do you think it is more important to reduce reliance on foreign oil through biofuel subsidies or prioritize the same agricultural land for food consumption needs to prevent future global famines?

"Left’s Favorite Economist Paul Krugman: Biofuels Are A Scam"
Comment:
I would like to thank you for your clear cut analysis regarding the current world hunger crisis. This topic is a emerging global dilemma that has caught my interest in the past couple of weeks. I had not previously considered the "biofuel scam," which critics blame for the starvation that is currently plaguing the world, until I came across your well construed post. As evidence from the article's persuasive tone, I firmly believe your ability to exude charisma through your prose is a quality trait that distinguishes you as a successful writer from others. In terms of the context, I also concur with the four key causes of this global emergency: the increased demand in emerging markets, high oil prices, bad weather, and most importantly, the rise in subsidized biofuel production. While I believe the facts and statistics that you incorporated in your entry are necessary elements, some of them are not well supported and seem a bit deceiving. For example, you claim that Brazil's use of ethanol from sugar cane actually "accelerates the pace of climate change by promoting deforestation." Even though ethanol production in Brazil may be indirectly related to global warming due to deforestation, you do not provide any empirical evidence supporting your assertion. How can you be so sure that Brazil's ethanol initiatives contribute more to global warming, rather than serving their intended objective of abating it? Although I understand the logic behind your statements, you lack well supported facts that would make your argument much more plausible. By integrating more numerical statistics throughout your entry that are linked to external sources, I am certain your work will become even more solid than it already is. Aside from my suggestions, I have much more to gain than criticize about this topic, such as learning about the shrinking of precautionary grain inventories. In response to this current food shortage, what are your thoughts on implementing mandatory grain reserves in the supplier countries to prevent similar situations from occurring in the future? Lastly, I admire your initiative in providing valid solutions in your closing remarks, as I too, hope to see a pushback against biofuel to ensure that no human has to starve to death because of excessively inflated food prices.

The Rising Star: All Eyes on Brazil

In a country where people give any excuse to party, soccer is considered a religion, and much of life is spent on the beach, Brazil is not only an attractive destination for tourists, but also for foreign investment. In 2007, total foreign direct investment in Brazil amounted to a new record of $34.6 billion. Unlike the other BRIC nations, Brazil differentiates itself with its stability, democracy, neutrality with other countries, and a lower GDP growth rate of 5.3%; the reason for this smaller number is due to the fact that it is wealthier and more urbanized than India and China. Under the presidency of Luiz Inácio Lula da Silva, as seen in the graphic to the right, since 2002, Brazil has benefited from a period of political and economic stability. As a result, president Lula has received a high approval rating of 66.8% from voting-age Brazilians. Much of this support has come from the poorer classes of society that have experienced heightened standards of living largely due to governmental handouts. On an economic level, the inflation rate has remained relatively low at around 4%, which has been implemented to allow Brazil to maintain levels of long-term sustainable growth. Its main source of international influence derives from its vast reserves of natural resources, which enable it to be an export-driven nation that ships goods, such as soya, ethanol, iron ore, beef, and machinery. Over the past couple of years, Brazil's success in exports was helped in part by productivity gains coupled with high commodity prices around the world. As the global demand for natural resources continues to escalate, this South American superpower sits in a secure and advantageous position to meet these needs for years to come. However, in order to capitalize on its foreseeable prosperity in the future, Brazil must address some of the major issues confronting it, such as the endangered Amazon rain forest, corruption, crime, and insufficient infrastructure.

With one of the largest reservoirs of carbon dioxide, Brazil's Amazon rain forest plays a critical role in regulating earth's ecosystem by abating the effects of global warming. Unfortunately, the Amazon is being deforested at an alarming rate as it is seen as a source of inexpensive land for farmers to cultivate sugar cane and soybeans on, and for ranchers to use as pastures for cattle. It is not surprising that 75% of Brazil's carbon emissions are attributed to the destruction of the rain forest. The irrevocable costs of environmental devastation do not justify further expansion into the country's northwest to satisfy demands for grazing land and agriculture.The prevention of illegal deforestation must be made a priority not only for Brazil, but also for the rest of the world because the worldwide effects will take a much more serious toll on planet earth than on this single nation alone. To resolve this problem, the Brazilian government and forest preservation organizations around the world have to realize that the net environmental benefits of preventing further annihilation of the Amazon outweigh any economics profits in the long-term. One solution would be to create carbon-credit markets, whereby the government sequesters intact areas of the forest while selling carbon credits to individuals, companies, and countries interested in lowering their carbon footprints. Meanwhile, Brazil must take more stringent measures to avert and penalize the bribing of Amazonian governors for allowing tracts of land in the Amazon to be illegally sold off.

In relation to bribery, corruption remains a major challenge facing Brazil's development. Similar to other third world countries, government officials are often paid to permit the occurrence of illegal activities or to expedite otherwise time-consuming procedures, such as the processing of official documents. In order to reduce the amount of corruption, it is in the nation's best interest to simultaneously minimize the amount of bureaucracy that impinges on the efficiency of doing business in Brazil. The general mentality in Brazil is that people are rewarded for their "ability to navigate around the bureaucracy," summarizes economist Simeon Djankov. By implanting fewer bureaucratic controls, there will be less of an incentive for businessmen and officials to break the law in order to carry out deals. In correlation with corruption is the issue of crime, which has plagued the nation's largest cities. One of the most crime-ridden areas is Rocinha, the favela (shantytown) pictured to the left, which is violently ruled by gangs of drug dealers. Through a stronger educational system, more employment opportunities, and a greater effort to dissolve gang related activities, the number of prison entrants will assuredly decrease as crime falls. The overpopulated penitentiaries, where gang chiefs operate and make orders from inside, are "human warehouses, universities for crime, factories for revolt," comments prosecutor Fernando Capez. It is clear that eliminating corruption and crime go hand in hand and will require bold steps on the government's behalf to ensure a safe and ethical society in Brazil's future.

The last key success factor that Brazil encounters is improving its infrastructure. The money that is received from its export-driven revenue should be reinvested into the roads, ports, and other foundations that help transport these same goods. Infrastructure investment does not even account for 2% of its GDP, which ideally should be at least 3%. Transportation costs amount to nearly 13% of Brazil's GDP compared to 8% in the US, a clear indicator that room for improvement exists. To emphasize the gravity of this issue, an interesting statistic predicts that by 2013, the consumption of ethanol in Brazil will double. If this is true, the country will need to invest $90 billion in new mills as well as $2 billion for railways, pipelines, and storage. As a byproduct to build up its framework, not only will greater transportation efficiencies arise, but also the creation of jobs that will help shrink its high unemployment rate of around 10%. Brazil's international influence can be attributed to the currently inflated commodity prices; however, its long run success depends on the critical infrastructure needed to accommodate this future prosperity. The country's extensive exigencies for road and rail networks is just one of several proposals needed for Brazil to maintain sustainable growth throughout this century. Bestowed with a plethora of natural resources, evidence verifies there is much untapped potential to ensure its emergence as a global superpower. While it is important for Brazil to strategically develop its infrastructure, lower corruption and crime rates, and preserve the Amazon, perhaps the latter is the most difficult challenge confronting Brazil. An undesirable consequence shared by all the flourishing BRICs is the inevitable depletion of resources and the environment. For Brazil, the fate of its long-term success depends on how well it can support its accelerated growth while concurrently making strenuous efforts to prevent the destruction of its rain forest.