The influence of biodiesel and ethanol production on food prices is probably the most noticeable in the USA where farmers are paying more and more attention to corn production which is later transformed to ethanol, and increased production of corn means decreased production of other food and therefore increasing the price of that food. With increased production of other food there's also the competition between the ethanol manufacturers and meat manufacturers of who'll get more corn, so price of the corn, as well as its production is also increasing because of the high profit, and with this development meat price will rise in years to come as well.
Food or fuel? US farmers are paying more and more attention to corn production which is later transformed to ethanol. Click on picture for full size.European Union
While the European Commission invites political leaders to debate an international approach to biodiesel and ethanol, the food and drink industry welcomes this dialogue which needs to work also towards the development of sustainability criteria for the production of biodiesel and ethanol. CIAA – the voice of the European food and drink industry – believes it is equally important to ensure availability and competitiveness of agricultural raw material supplies for the production of food and drink products.
“The development of biofuels (biodiesel and ethanol) bears important challenges for the food and drink industry,” said Jean Martin, President of CIAA. “The launch of many biodiesel and ethanol programmes around the globe is contributing to increased tension and high price volatility on agricultural markets. The diversification of biodiesel and ethanol sources is one of our objectives in trying to reduce tensions in certain sectors.”
Biodiesel production in Member states and in EU-25 (Source: EBB, 2006). Click on picture for full size.To maintain a competitive EU food and drink sector, industry must rely on sufficient feedstock availability. CIAA has called on the European Commission to ensure regular monitoring of the availability of agricultural markets and to put into place safeguard mechanisms to prevent or counter any crisis situation.
Mr. Martin added: “In developing sustainable biofuel schemes, it is essential that any approach strikes a balance between the objective of reducing green house gas emissions, protecting the wider environment, including bio-diversity, and the need for practical solutions that are easy to enforce and to control. Imported feedstock for biofuel use will have to comply with the same system, calling for reference to existing international standards including good agricultural practices and specific biofuels sustainability criteria. It is important to allow trade flows to continue without impediments.”
At EU level, the impact a 10% legally binding target will have on the supply in agricultural raw materials for the food and drink industries in terms of availability and price has raised concern within CIAA. It must be recalled that any binding character of a target is conditional to production being sustainable and to second-generation biofuels becoming economically viable.
Biodiesel and ethanol are at this moment mostly produced out of the canola, corn, sugar cane and soybean. In the same time there are about 850 million people that don't have enough food to eat. And when we look at the current trend of transforming the food into a fuel that is currently happening in rich countries, it is much easier to understand the words of Jean Ziegler, UN Special Reporter from program "Right to food", from his speech in 2006 when he said: "Every child who dies of hunger in today's world has been murdered".