Process Management

News last update:6 Aug 2012

Biofuels halt may ease food prices

A moratorium on global grain- and oilseed-based biofuels would help ease raging wheat and corn prices by up to 20% in the next few years, the International Food Policy Research Institute said.

"Our models analysis suggest that if a moratorium on biofuels would be issued in 2008, we could expect a price decline of maize by about 20% and for wheat by about 10% in 2009-10. So it's this significant," Joachim von Braun, who heads the International Food Policy Research Institute (IFPRI), said.

"There are biofuels and there are biofuels, good and bad ones ... Waste-based and sugarcane-based can be very good," von Braun said.

Biofuel supporters in the United States call the ethanol criticism wrong-headed and see the technologies as a needed alternative to America's dependence on foreign oil.

That is especially important, they say, with oil prices breaking new ground close to US$120 a barrel. US food prices are expected to jump by up to 5% this year. At the same time, about a quarter of the US corn crop will go toward ethanol.

Bush: Energy biggest price driver
Yet the Bush administration sees energy, not ethanol, as the biggest price driver, and describes a future for biofuels that leans heavily on alternate sources like switchgrass.

"The truth of the matter is, it's in our national interest that we - our farmers - grow energy, as opposed to us purchasing energy from parts of the world that are unstable or may not like us," President George W. Bush said.

However, some state governments are publicly reconsidering their ethanol policies, and a few big meat and poultry companies are asking for steps to cool the high cost of animal feed.

Von Braun argues that crops like sugar cane offer greater promise for biofuels. "The opportunities of agriculture being an energy producing sector should not in principle be discarded," he said.

Von Braun also said that changing supply-and-demand dynamics had been driving soaring crop prices through the end of last year, but that market speculation and government steps to curb prices - such as export bans - had taken on an increasingly influential role in 2008.

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