Biofuel Subsidies and Food Prices in the Context of WTO Agreements

The recent soaring food prices for basic food items like maize, wheat, rice, soya beans and oil seeds have been attributed to a number of factors including biofuel production. The production of biofuels, which is projected to increase in the near future with greater potential to intensify the demand for feed stocks, is largely policy-driven. The emerging biofuel market is a significant source of demand for agricultural commodities including food staples, with food-security implications for net-food importing developing countries. Under the WTO rules, there is considerable potential for disciplining trade-distorting biofuel subsidies. Policy measures so far in response to recent food price hikes are of short term in nature, and more policy actions ensuring agricultural productivity growth and improving developing country infrastructure are necessary for long-term and sustainable availability of agricultural food. Full paper in http://www.thecommonwealth.org/files