Link between biofuels and rising global food prices highlighted

ONE OF the key contributors to increased global food prices is the transfer of land from food to biofuel crops, an agricultural conference in Galway was told yesterday.

Prof Bob Young, chief economist with the American Farm Bureau in Washington, said a reduction in the amount of land used for the production of biofuels could significantly alter the upward trend in world food prices.

He told the Agricultural Science Association national conference that escalating food prices and concerns about the real impact of biofuel production on global warming could lead to a change in policy.

“The US has set a target of 15 billion gallons of biofuel in 2015. It would take 30 million acres (12 million hectares) of maize, one-third of the US maize area, to achieve this target,” Mr Young said.

“While the Democrats are committed to retaining the current biofuel target, the Republicans are seeking its removal.”

He said the shift to biofuels, combined with the weak dollar and strong export demand for meat and dairy products, has resulted in a phenomenal increase in prices for US farm products during the past two years. But increased production costs had resulted in the income increase being taken away.

Jeff Grant, former chairman of agricultural promoters Meat and Wool New Zealand, told the conference that increasing world population, high energy costs and growth in the major economies of Asia and South America all point to a continuation of food inflation.

He said world food stocks are now at their lowest level, lower than at any period in the last half-century. After the second World War, “there was one year’s supply of food in stock,” he said. “Stocks had reduced to 133 days’ supply in 2003 and at the end of last year, stocks had more than halved, to just 57 days.” Land availability is a critical issue in food production.

Prof Gerry Boyle, director of Teagasc, the agriculture development authority, said: “The farming sector must grasp the opportunities provided by the need for both food and fuel security.”