As grain prices rise, so does Germany's debate over biofuel

Two German cabinet members have squared off on whether biofuel production is contributing to higher food prices. Biodiesel and bioethanol provide about 6 percent of the overall fuel supply.

Is biofuel responsible for rocketing food prices?

It is a global debate following droughts in the United States and India, and with the G20 countries expected to find solutions for yet another famine threatening the Sahel region in northern Africa. In Germany, where the price for grain is at a 25-year high, the issue has divided society and the government.

“We need to put corn on the plate, not in the tank,” said Dirk Niebel, German minister for international development and cooperation last week, before setting off on a tour of African countries. The minister called for a halt in the sales of gasoline mixed with ethanol, known in Germany as E10. He echoed a demand by Jose Graziano da Silva, director general of the World Food Organization (FAO), who asked the US, where the drought has pushed corn production to its lowest in six years, to temporarily suspend its biofuel production. Roughly 40 percent of corn grown in the US is turned into fuel.

But Mr. Niebel does not have the support of his cabinet colleagues. “There is no connection between the production of biofuel and food prices,” says Peter Altmaier, German environment minister. “Not in Germany, anyway.”

Science seems to be on Mr. Altmaier’s side. “Food prices have increased by 100 percent over the last decade,” says Harald von Witzke, professor for international agricultural trade at Humboldt University in Berlin. “But only 10 percent of this increase is due to the use of arable land for the production of ethanol. The main driver of food prices is the rising cost of energy.”

A golden promise loses its shine

For many environmentalists, biofuel has turned from the golden promise of a renewable energy source into a cause for food shortages and monoculture, or the practice of cultivating large amounts of a single crop for an extended period of time. Both Greenpeace Germany and the national environmental organization BUND have called for a stop of biofuel production.

Biodiesel and bioethanol provide about 6 percent of the overall German fuel supply. “Given that we are also importing biofuel, it would be appropriate in times of rising food prices to at least temporarily suspend the practice to take pressure out of the market,” says Martin Hofstetter of Greenpeace Germany.

Some people believe that food is still not expensive enough.

Hellmuth Riestock runs a successful farm including dairy and slaughterhouse in Fehrbellin, just north of Berlin. Last year, he did not sell his rye as foodstuff, because the price would have been below the production costs. So he turned it into fuel and burned it in his own power station, which feeds electricity into the national grid, thus making a profit. This year, though, the risen food prices led him to sell his rye at the market again.

“There is something wrong in the system if turning crops into fuel is more profitable than making food out of them,” he says. “It basically means that food, at least in the Western world, is still too cheap.”