Biofuels shift seen to put major squeeze on food prices

Biofuels shift seen to put major squeeze on food prices
AFP
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First Published: Thu, Aug 09 2007. 05 14 PM IST
Updated: Thu, Aug 09 2007. 05 14 PM IST
Manila, 9 Aug 2007:A global shift toward renewable energy could jack up food prices by up to 80% as crops and farmland are diverted to producing biofuels, an international agricultural think-tank warned today.
Joachim von Braun, director-general of the International Food Policy Research Institute, said further crop yield improvements and increased efficiency of these alternative fuels were required if a global price shock were to be avoided.
Unless governments invest to improve farm productivity “so that we can cope with the increased demand for biofuels, the (food) prices may come up between 40 and 80% on top of what you can see,” he told reporters on the sidelines of an agriculture and poverty conference here.
“If it’s well managed and we have more investment in research and technology to bring up yield levels in the crops and improve the efficiency of biofuels, these price effects may only be between 5 and 15%. So it depends on government policy,” he added.
Von Braun said that “globally, many countries have plans to scale up biofuel production in the order of covering 10-20% of their transport fuel,” chiefly ethanol and biodiesel.
Brazil has committed to 25% while Europe plans to use biofuels for 10% of the countries’ needs by 2020, he added.
In Asia, he said the picture was mixed, which China having announced plans to shut down some of its ethanol plants “because of the concern for using too much grain for them.”
On the other hand, India has moved rapidly into ethanol production, Japan wants to import more biomass to address its international commitments on dealing with climate change, and Malaysia and Indonesia both wanting to be major suppliers of biodiesels based on palm oil.
“So there is a general idea that this is an important market. It will be partly driven not only from the energy market side but from the global demand for renewable energy.”
He said crops which are “fundamental for the livestock industry are being affected and clearly we will see a lot of correlation in the price movement in the energy market and in the food market.”
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First Published: Thu, Aug 09 2007. 05 14 PM IST