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Biofuels contributing to higher global feed prices, tighter markets

Written April 20, 2011

Policy should be 'food first,' say experts

The diversion of crops for biofuels has contributed to global feed and food prices hitting record highs, according to experts

Corn prices in the U.S. rose by 73% during the second half of 2010, and the proportion of Chinese cassava going to ethanol jumped to 52% from just 10% in 2008. The United Nations Food and Agriculture Organization has reported that its index of food prices is showing the highest numbers ever, with prices rising 15% from October to January.

In the U.S., Congress has mandated that biofuel use must reach 36 billion gallons annually by 2022. The European Union has stipulated that 10% of transportation fuel must come from renewable sources such as biofuel or wind power by 2020. Countries such as China, India, Indonesia and Thailand have also adopted biofuel targets.

With so many factors affecting food prices and availability, experts say it's difficult to assign a hard number representing precisely what role biofuels play in the statistics. “The problem is complex, so it is hard to come up with sweeping statements like biofuels are good or bad,” said Oliver Dubois, a bioenergy expert at the FAO in Rome. “But what is certain is that biofuels are playing a role. Is it 20 or 30 or 40%? That depends on your modeling.”

Dubois and other food experts say they would like to see countries revise their policies so that rigid fuel mandates can be suspended when food stocks get low or prices become too high. “The policy really has to be food first,” said Hans Timmer, director of the Development Prospects Group of the World Bank. “The problems occur when you set targets for biofuels irrespective of the prices of other commodities.” 

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