As biofuel use in the US and Europe rises, the demand for corn and palm – frequently used in the production of biofuels – is also on the rise. The chart on the left, courtesy of index mundi, clearly shows the effect of the pressure for corn for use in biofuel production on corn prices. What could this increasing demand for biofuels in the US and Europe have to do with food prices in Guatemala?
The New York Times recently reported that the rise in the use of biofuels in other countries is forcing the price of corn in Guatemala to rise to unprecedented levels. In Guatemala – where corn is a staple of the diet, over a third of the population lives in poverty, nearly half of children under the age of five are malnourished, and biofuels are seldom used – the growing appetite for biofuel is causing many to go hungry.
Domestic production of corn dropped precipitously in Guatemala in the 1990’s when the price of corn in the US dropped to levels that made it cheaper to buy American corn than to grow their own. By 2005, the bulk of the corn used in Guatemala came from the US. However, the demand for biofuels began to rise in 2005 and US farmers found they could sell their corn for greater profit if it was sold for use in biofuel production. Currently 40% of US corn production goes for biofuel production, resulting in the rapid rise of corn prices in Guatemala over the last three years. Since chickens eat corn feed, the price of eggs in Guatemala has tripled over the same period.
Because of its proximity to the US, the pressure on Guatemalan farmers to grow corn or palm for biofuel – or to lease their land to those who will – is increasing. It’s a dilemma for the farmers because without their land, or left with land without sufficient water because the larger plantations have diverted or depleted the supplies, the farmers have no hope of growing food for their own use. As a result, many farmers are renting land far from where they live. Some are even growing crops in the median of rural highways.
The New York Times story included several interviews, including this interview with Gilbert Galindo Morales, 46, Guatemalan farmer who is considering leasing his land.
The problem is not restricted to Guatemala. It’s impacting people worldwide. What do you think about the effect of increased demand for biofuels on populations such as those in Guatemala?