Let’s stop subsidising the production and use of bio-fuels

Editorial by Willem Buiter for Financial Times. A recent World Bank report on the causes of the rise in food prices during the past three years confirms the view, widely held outside the Washington DC White House and the French farmers’ lobby, that increased bio-fuel production has made a major contribution to rising food prices. According to Rising Food Prices: Policy Options and World Bank Response, global wheat prices rose by 181 percent over the 3-year period leading up to February 2008 and overall global food prices by 83 percent. Food crop prices are expected to remain high in 2008 and 2009 and then begin to decline. They are likely to remain well above the 2004 levels through 2015 for most food crops. Around 15 percent of the increase in food crop production prices is due directly to higher energy and fertilizer costs.