Biofuels halt may ease food prices

“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.

For regular updates on feed news subscribe here
to our free newsletter