Biofuels will boost farming sector

The growing demand for biofuels is likely to keep crop prices high and even cause a surge in the cost of meat and other animal products, according to the OECD and the UN.

A joint study published by the two organisations says that recent hikes in the value of many farm products on the commodity market are down to droughts and low stockpiles but in the longer term the global thirst for energy is likely to be a driving factor behind consistently high prices.

Growing cereals, sugar, oilseed and vegetable oils to produce ethanol and biodiesel as substitutes for fossil fuels is underpinning crop prices and, indirectly through higher animal feed costs, the prices for livestock products, says the report.

This is good news for farmers and agricultural economies, of course, but it likely to fan the flames of the debate over whether biofuels could make food unaffordable, particularly for the urban poor in the developing world and those countries which import most of their food.

In the United States, annual maize-based ethanol output is expected to double between 2006 and 2016.

In the European Union the amount of oilseeds, mainly rapeseed, used for biofuels is set to grow from just over 10 million tonnes to 21 million tonnes over the same period.

In Brazil, where the majority of cars run on ethanol, annual production is projected to reach some 44 billion litres by 2016 from around 21 billion today.

Chinese ethanol output is expected to rise to an annual 3.8 billion litres, a 2 billion-litre increase from current levels.

The full report can be found on the OECD website.

Sam Bond

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