MANAGUA – A political rift over the degree to which biofuel production in Latin America is pushing record-high food prices widened last week at a regional food-security summit in Managua, attended by presidents and ministers from 14 Latin and Caribbean countries.
The final declaration of the summit included a controversial clause that condemned “proposals and programs in developed countries that use food for the production of biofuels, which aggravates the already critical food situation in many countries.”
That clause was a deal-breaker for El Salvador, where alternative fuels represent a budding new industry. Costa Rica was the only other country not to sign the final accord, citing concerns over political implications (see separate story, page N2).
Ethanol production has made inroads in Latin America in recent years, driven by the growing demand for alternative fuels in the United States and Brazil. The issue has pitted ethanol-producing countries, which have received support from the United States, against allies of Venezuelan President Hugo Chávez, the region’s biggest oil exporter.
Though countries such as El Salvador, Guatemala and Brazil have made recent agreements to export ethanol to the United States, leftist leaders such as President Daniel Ortega have steered away from the industry.
Ortega has been critical of corn-based ethanol, and though he has met with canebased ethanol champion President Luiz Inácio Lula of Brazil, he continues to be faultfinding of the industry and has shown no interest in supporting the two San Antonio sugarcane plants that already produce ethanol biofuel, and which last year announced plans to double production (NT, Aug. 17, 2007).
“The use of basic food products to produce fuel reduces basic food for our people,” Ortega insists.
Economist Francisco Mayorga says he thinks Ortega’s reluctance may have to do with him not wanting to upset Chávez, who wouldn’t look favorably upon economic development of alternative fuels.
Corn Versus Sugar
El Salvador’s Foreign Minister Marisol Argueta said critics of biofuels are wrong to issue blanket condemnation of the entire industry, such as the one she felt was made in the final declaration of last week’s summit.
“It’s important to make the distinction between corn-based biofuels and sugarcanebased ones,”Argueta told The Nica Times, in explaining why she withheld El Salvador’s signature from the document.
El Salvador has biofuel plants that produce ethanol derived from sugarcane, which she said doesn’t threaten food prices like corn-based production does.
Deodoro Roca, the Central American coordinator for the United Nations Food and Agriculture Organization (FAO), told The Nica Times that U.S. subsidies for cornbased biofuels in the United States have given the industry a bad name.
“When biofuels were produced using corn in the United States, it caused a certain commercial imbalance,” he said.
The U.S. subsidies for corn-based biofuels led to speculation on corn prices, he explained, driving up corn prices in countries such as Mexico, and making basic food staples such as tortillas unaffordable for many poor families.
Ethanol production based on sugarcane, which has become a large industry in countries such as Brazil, has proven much less disruptive for basic food prices, Roca said. In Brazil, biofuel and other sugarcane derivatives are now the second-leading source of energy, behind oil and ahead of hydroelectric power, according to a government study released this week.
The debate at the food-security summit in Managua traced the Latin American debate over biofuels back to its controversial political roots, when former Cuban leader Fidel Castro last year called U.S. President George W. Bush’s plan to cooperate with Brazil on biofuel production “genocide.”
The prime minister of the Caribbean Island of Saint Vincent and the Grenadines, Ralph Gonsalves, said that Castro initially “wasn’t taken seriously” but that the food crisis has since made him look like a visionary.
Cuba’s Vice President Esteban Lazo reiterated Cuba’s position this week.
“The food crisis we face today is exacerbated by … the fact that significant volumes of U.S. and (European Union)-grown grains and cereals are destined, more and more, to the production of biofuels and the speculative practices surrounding transnational big capital, which gambles with food inventories at the cost of hunger for the poor,” he said.
Though Guatemala’s biofuel industry has seen some success, Guatemalan Foreign Minister Haroldo Rodas – who was representing leftist President Alvaro Colom at the summit – didn’t offer any objection to the accord, as El Salvador did.
The Inter-American Development Bank last year announced plans in Guatemala to invest $200 billion in biofuels and to boost Latin America’s ethanol production to 5 percent of world production.
Bush also visited Guatemala last year as part of a Latin American tour to seek support for biofuel production to supply U.S. demand. It was during Bush’s tour that Chávez held an alternative Latin tour to try to consolidate support for the Bolivarian Alternative for the Americas (ALBA) (NT, March 9, 2007)
Though the United Nations’ top food adviser, Olivier de Schutter, recently called U.S. and European biofuel development plans “irresponsible” for their effects on food prices and the environment, Roca said biofuels really are not an important factor in skyrocketing food prices.
Rising demand for food in developing countries such as India and China and increasing oil prices, which in turn increase shipping costs, have had a greater effect in increasing food prices, he said.