DTI says biofuel subsidy puts pressure on food prices

MANILA, Philippines - The Department of Trade and Industry (DTI) said the government should review the subsidies for biofuel because it contributes to higher food prices.

The statement stemmed from the report of 10 international agencies including the World Bank and the World Trade Organization saying that governments should remove policies to support biofuels because they are pushing food prices higher.

For years, experts have weighed in on the “food versus fuel” debate. Now the pressure to pick a side has intensified as food prices continue their upward trend worldwide.

In an interview with reporters, Trade Secretary Gregory L. Domingo said there is a need to protect consumers from higher food prices but at the same time the policy should be fair to businesses which already invested in biofuel.

“We have to find a solution where we can help everybody,” Domingo told reporters. “At a minimum we have to consider what these guys are saying because these guys are big organizations and well respected organizations so at a minimum we should think really hard about what they are saying and see how that can be applied to us and whether it makes sense in our particular situation.”

From a consumers point of view, Domingo said the stand of the World Bank makes sense because prices of food products globally have gone up. However, he said businesses will suffer if the country foregoes its incentives on biofuels.

Domingo noted that most countries are giving incentives to alternative fuel sources. Now, he said the World Bank and other influential organizations are saying that these government issued perks must be removed to rechannel produce to food instead of fuel.

“Review the biofuel policy at least,” Domingo said. “I’m talking from the consumer side and not the business side. I’m wearing my consumer hat because if it’s the business side then it should be energy and agriculture,” he said in Filipino.

In answering the “food versus fuel” question for the Philippines, Domingo said the size of investments made in ethanol should be considered. He noted that there are some investments in ethanol here but they are not that big. At the same time he said that the Philippines has not been meeting the domestic ethanol requirement that is why we have been buying from other countries.

“What are you going to do with those who have already invested in ethanol production and those that invested in biodiesel,” Domingo asked. This is the reason why the Philippines still has not made its decision. “It is something that we need to think about even if the seeming global consensus is that biofuel incentives may not be the right policy.”