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Pig Industry Insider

Government biofuels policies hurting animal feed industry

June 3, 2011

The grain used to produce ethanol would otherwise have gone into human food or feeds for animals. At that level it is a straightforward matter of supply and demand. The mistake would be to pin the blame on the ethanol producers. It is the governments that have been at fault by setting biofuel policies and subsidies without taking account of what these would mean for the crops used as the raw material.

The line of organisations has recently lengthened in support of the view that ethanol production negatively affects the price and availability of grains for feed and food. Voices from the United Nations and the World Bank to international charity Oxfam say that the impact of the biofuels business is undeniable --- the only question concerns its scale.

But the US-based ethanol producers insist through their Renewable Fuels Association that this is wrong. The association quotes some authoritative reports that have pinned a large slice of the blame for rocketing grain prices on the action of speculators.

It is hard to disagree when evidence from the commodities markets shows that the amount of volatility is speculator-driven. Nor can we dispute the claim that the higher incomes enjoyed by grain farms have prompted investment leading to increased production volumes.

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