Instead of biofuel, other global trends starve Haiti

By David Adams, Times Latin America Correspondent
In print: Monday, April 21, 2008

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When deadly food riots erupted in Haiti this month, experts were quick to blame the United States' policy of harvesting grains to make biofuels.

Using food crops to satisfy the needs of wealthy, gas-guzzling consumers ahead of the starving poor was "a crime against humanity," according to one United Nations official.

Anger and fear over food prices that have climbed an average of 40 percent since last summer are visible worldwide. In Haiti, where rice prices have doubled since last year (50 percent since January alone) at least five people were killed and 25 injured in food riots and clashes with U.N. peacekeepers. The protests led to the ouster of the prime minister this month.

"The last few months have been outrageous," said Gabriel Verret, the president's top economic adviser. "It's the same thing as is happening all over the globe."

But in Haiti biofuels are not the chief villain. Haiti does not use its farmland to produce ethanol or biodiesel, the two main alternative "green" fuels.

"The role biofuels plays in all this is marginal compared to the host of other issues," said Matt Hartwig, spokesman for the Renewable Fuels Association, which represents the ethanol industry. "We don't use rice to make ethanol, nor do we grow corn in rice paddies."

The real culprits — at least in the hemisphere's poorest country — are trade policies that have decimated Haitian agriculture and a catastrophic drought half a world away that has made rice so valuable that paddies in Thailand are under armed guard.

• • •

Before 1950, Haiti produced more than 80 percent of its own food.

But in the 1980s the International Monetary Fund persuaded the Haitian government to reduce its import tariffs. Tons of low-priced U.S. goods, rice in particular, began to flood the docks of Haitian ports. This put many of Haiti's rice farmers out of business. Now, of the 400,000 tons of rice consumed in Haiti each year, three-quarters is imported from the United States.

"Removal of tariff barriers has allowed a handful of northern countries to capture Third World markets by dumping heavily subsidized commodities while undermining local food production," according to Anuradha Mittal, executive director of the Oakland Institute. "This has resulted in developing countries turning from net exporters to large importers of food."

Though most of Haiti's rice comes from the United States, the price has been affected by poor harvests in other parts of the world. For the last six years Australia has been hit by a catastrophic drought, which has seen rice production fall by a stunning 98 percent.

"It may never recover," says Sophia Murphy, who lives in Australia and is a senior adviser at the Minneapolis-based Institute for Agriculture and Trade Policy.

In times of scarcity, big importers tend to rush to hoard stocks on fears they will not be able to meet domestic demand. Major producers also begin restricting exports to keep domestic prices down. Much of the recent rice crisis came after major exporting nations, including Egypt, Vietnam, India and Indonesia, imposed restrictions on exports. This has drastically reduced available global stocks and caused prices to reach as much as $1,000 per ton.

• • •

While most of the focus in Haiti is on rice, prices of other basic food items, such as vegetable oil, have also risen. In the case of other grains, especially corn and soy, it's hard to ignore the biofuels factor.

One quarter of the U.S. corn crop is used to make ethanol.Although record amounts of corn are being planted — 2007 was the largest crop since 1944 — farmers planted less soy and wheat, pushing prices up on those crops.

But pegging ethanol's impact on food prices is difficult because of the large number of variables involved. Studies have produced estimates as low as 15 percent and as high as 50 percent.

"There's no mathematical formula," said Keith Collins, who recently retired as chief economist at the Department of Agriculture.

The trend of tightening demand in the global grains market began to appear eight years ago, well before the biofuels boom took off, Collins said.

This was due to episodes of bad weather and unprecedented economic growth in countries like China and India that permitted people to buy more and better food.

But biofuels may have tipped the scale.

"Without biofuels you would have had supply meet demand," he said.

Collins predicts the demand for corn will only get worse due to a slew of ethanol plants about to go into production. "It looks to me that we have taken federal policy on biofuels too far and overreached," he said.

Lifting a 54-cent-per-gallon tariff on ethanol imports from Brazil, (which makes its fuel from sugar, not corn), as well as ending a system of tax credits for ethanol blenders in the United States (51 cents per gallon), could help ease the situation.

"Why keep pouring gasoline on the fire?" Collins said. "Let's roll back the incentives and let the market play its role."

The ethanol industry says it's not to blame, pointing the finger instead at the rising price of oil, which hit $115 a barrel last week.

"What people are failing to appreciate is how much oil impacts production of food at every step of the way, from tractors farming the land, to fertilizers, and transporting produce to market," said Hartwig of the renewable fuels group.

"When oil hits $115 a barrel, it's inevitably going to wreak havoc on the world economy."

• • •

All this demand for corn — as food for humans and livestock, as well as fuel — has caused another major problem for poor countries like Haiti.

Growing more corn has meant using more fertilizer. This has helped drive up fertilizer costs 168 percent since 2000, and they are now the highest on record, according to the U.S. Department of Agriculture.

Farmers in Haiti say they can't afford to plant new rice crops due to the high cost of fertilizer.

Facing rock-throwing protesters outside the palace gates, Haiti's president, Rene Preval, announced subsidies to cut the cost of rice more than 15 percent. But critics say that may be too little too late.

Preval, an agronomist by training, is asking for urgent international help. The United Nations has offered emergency food supplies targeting children, pregnant women and nursing mothers. The World Bank chipped in $10-million.

To ensure this years' rice harvest Preval said he will ask Venezuela to help provide fertilizer for farmers.

"When you put the rice and the fertilizer situation together — that is what's hurting us," said Verret. "It's a perfect storm."

David Adams can be reached at dadams@sptimes.com.