Biofuels seen as ‘boon for poor’

Brazilian president refutes OECD report warning biofuels will push food prices.

corn planting biofuels
Changes in the end use of crops is  likely to intensify the  "food versus fuel" debate [AFP]
His comments came after a report published by the Food and Agriculture Organisation of the UN jointly with the Organisation for Economic Cooperation and Development said that increasing reliance on biofuels could drive up food prices in poor countries.

The report said that between now and 2016 substantial amounts of maize in the United States, wheat and rapeseed in the European Union and sugar in Brazil would be needed for ethanol and bio-diesel production.

The study found that expected higher commodity prices reflecting such demand were of “particular concern” in food-importing developing countries and were likely to intensify a “food versus fuel” debate.

It said that while higher biofuel feedstock prices would benefit producers of such commodities, they also “imply higher costs and lower incomes for producers that use the same feedstock in the form of animal feed.”

Increased investment

Tom Adshead, an economist, told Al Jazeera: “The market always finds an outlet. If you artificially depress the price of feedstock for biofuel, then there will be under-investment in agricultural production, and so supply will be restricted.

OECD report

“The West needs to stop subsidising its farmers, and create a level playing field for farmers in developing countries.”

Tom Adshead, an economist 

“If you let the price move freely, then this will give a boost to farmers, including those in developing countries.

“Of course, the West needs to stop subsidising its farmers, and create a level playing field for farmers in developing countries. This will increase investment in renewable fuels, which will reduce the cost of energy in the long run.”

In early June, the Organisation of the Petroleum Exporting Countries said that biofuels would drive the price of petrol “through the roof”.

Opec members, which control 40% of global petrol production, stands to lose the most as G8 countries announced the shift to biofuels.
Unexpected changes
While overall inflation in most industrialised countries was expected to remain same in the coming years, developing countries face an increase in food price.

The upward pressure can be attributed to increased demand and changes in eating habits, as incomes rise, as well as to alternative uses for food crops, notably as components of biofuels, that have “led to higher domestic prices.”

The report said that its projections could be altered by new production technologies, changes in biofuel prices or unexpected changes in prices for crude oil and feedstocks.

There are at present two families of biofuels, ethanols and biodiesels. Ethanols are derived from sugar beets, wheat, corn or sugarcane.

Biodiesels make use of transformed oils from plant sources that are then mixed with diesel fuel.

Source: Al Jazeera, News Agencies


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