Bio-fuel crops: no gains for 3rd World

The UNCTAD’s trade and development report-2007 has said that
strong demand for bio-fuels was in response not only to high crude petroleum
prices but also to the growing concerns about global climate
change.

Global prices of sugar, corn and vegetable oils, in particular,
shot up as these are used for production of bio-diesel. In 2006 sugar prices
increased by 49.4%, maize prices by 24.4% and that of palm oil by
13.3%.

The UNCTAD report has raised concerns over the competing use of
land for production of food, animal feedstock and bio-fuels.

Corn
displaces soybeans
Corn cultivation in US for bio-fuel production has
displaced soybean cultivation. The soybean prices rose sharply in mid-2006.

The situation, in turn led to higher prices for animal feedstock and
meat. The higher food prices can have dramatic consequences for food-importing
developing countries, the report said.

The report also raised concerns
that bio-fuel crop cultivation may cause deforestation, water scarcity and
biodiversity loss.

It, however, suggested that a possible solution may
be the extraction of bio-oil from tropical plants like Jatropha, which can be grown on “degraded” lands and
therefore not compete with food crops.

Oil importers are
vulnerable
Analysing the terms of trade, the report said that in 2006
there was significant gains for oil and mineral exporting countries.

Most
vulnerable have been the oil-importing countries which export few primary
commodities. East Asia, South Asia and Africa suffered deterioration in the
terms of trade.

FAO has said that the global cereal prices will remain
high despite the record world cereal production. The International Grains
Council in August 23, 2007 had said that grains prices shot up due to increase
in wheat prices by $ 20 to $ 35 a tonne.

Sharp increase in ocean freight
rates further lifted the landed costs for importers. Global wheat output is
estimated to be 607 million tonne, about 16 million tonne higher than in 2006.