Michael Christie, Reuters 5 Apr 08;
MIAMI (Reuters) - Environmental groups urged the Inter-American Development Bank on Saturday to stop lending money to big companies piling into the booming ethanol business that some critics say is partly to blame for soaring food prices.
As riots over the cost of living broke out in impoverished Haiti, the IADB prepared to announce increased funding of ports, sugarcane mills and other biofuel ventures throughout Latin America, citing plant-based fuels as a crucial counterweight to climate change and rising energy prices.
"The bank's aggressive promotion of biofuels may be good for corporations, but it's a bad deal for farmers, indigenous people and the environment in Latin America," Kate Horner of Friends of the Earth-U.S., said at the bank's annual meeting in Miami.
World food prices have jumped due to what the U.N.'s World Food Program says is a mixture of high energy prices, which are boosting transportation costs, increased demand for food by developing countries, erratic weather and competition between biofuels and food for land and investment.
The cost of food is threatening millions of people with hunger and raising the risk of political instability.
Four people were killed when crowds ransacked and burned stores in the southwestern Haitian town of Les Cayes on Thursday night and looted food containers at a U.N. compound.
DIETARY SHIFT CITED
Friends of the Earth and other environmental groups say a U.S. law that aims to almost quintuple the amount of biofuel used in the United States by 2022 has led to a spike in production and investment in the Americas.
Some grains production in the United States has been diverted into ethanol and the United States is also importing large amounts of sugarcane ethanol from the world's biggest and most efficient producer, Brazil, despite steep tariffs.
Gregory Manuel, an adviser to the U.S. government on alternative energy, said biofuels were a marginal contributor to rising food prices.
"The No. 1 issue is the emerging market's dietary shift towards higher protein diets. That is the No. 1 issue," he said at the IADB meeting.
High fertilizer and transportation costs and "a crash in wheat stocks" due to a two-year drought in Australia are also to blame, Manuel said.
Environmentalists, however, say there is a measurable impact on food supply in places like Brazil.
Spurred by the possibility of a rich market for ethanol in the United States, investors -- many of them foreign -- have been buying tracts of land in Brazil, pushing up prices and driving away the small-scale family-based farms that supply up to 60 percent of the country's food, said Lucia Schild Ortiz of Friends of the Earth Brazil.
Doubts have also arisen about how environmentally friendly ethanol really is if it results in forests or savannah being cleared for sugarcane or palm oil and does nothing to reduce the world's dependency on the internal combustion engine.
"There was a time when the environmental movement took for granted that anything that came from a plant was good. So (ethanol) got lumped with renewables," said Horner.
Not any more.
CULTIVATING JATROPHA
IADB President Luis Alberto Moreno said he believes Latin America has a bright future in "green energy," or biofuels. The bank has around $3 billion in private-sector loan projects under consideration.
Critics say the vast majority do not promote rural development in Latin America but are aimed at supporting large exporters satisfying U.S. demands for energy.
In Haiti, the poorest country in the Americas, organizations like the IADB are eager to promote projects that cultivate jatropha, a plant capable of surviving in the country's denuded wastelands and also of producing an oil in its nuts that can be used as fuel.
The projects would involve some irrigation.
"Why don't they use it to produce more food?" said Aldrin Calixte of the activist group Haiti Survie.
(Editing by Tom Brown and Xavier Briand)
