Last week, I posted about World Bank economist Don Mitchell’s controversial report on biofuel and food prices. According to Mitchell’s calculations, U.S. and E.U. support for biofuels accounts for 70 to 75 percent of the recent rise in global food-commodity prices — one that could force an additional 100 million people worldwide into poverty conditions, according to the U.N. Food and Agriculture Organization.

The jump in food prices has an ecological component, too. With commodity crops like corn, soy, and wheat trading at or near all-time highs, farmers are scrambling to take advantage by putting as much land as possible into production, and showering their land with agrichemicals to ensure the highest yields possible. As a result, the world’s largest agrichemical firms have experienced a windfall.

But as I pointed out in my post, as damning as Mitchell’s study is to U.S. and E.U. biofuel policy, his analysis has what I see as a blindspot: He never accounted for the fact that over the past 20 years, the globe’s governments have systematically sold off their grain reserves, on the reasoning that grain stores “interfere with the market.”

With the globe’s grain stores gutted, it was no surprise that commodity prices shot up when the U.S. government began mandating that huge portions of the U.S. corn crop (one-third this year; more next) be diverted to making car fuel.

And a according to Patrick Woodall, a senior researcher for Food and Water Watch, the World Bank itself contributed to the push to sell of grain stocks.

From an article in the Delta Farm Press:

Woodall says another factor driving stocks down in the Third World is “the World Bank has pressured countries to eliminate their own reserve programs, much like the U.S. eliminated theirs and the EU and China reduced their buffer stock programs.

“Countries like Kenya and Malawi were forced by the World Bank to sell off their reserves. That was partly because of fiscal austerity reasons. But it was also partly to repay debt to the World Bank.”

Woodall said other countries including India, Senegal, Zambia, and Tanzania reduced regional marketing programs. “Those included a lot of regional (storage) programs that were used to take in crops and bring them to market. But also as a reserve against times of crisis for high food prices and a hedge against low supply.”

As these programs have been eliminated to conform with World Bank directives, “we’re now in a situation where there’s no buffer to protect people from a severe food crisis.”

And word from the recent G-8 meeting is “more of the same bad medicine. The next round of WTO talks at Doha will present a new opportunity. But it’s really just more of the same. And more of the same in the current environment won’t help farmers and consumers in the developing world or here at home.”