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Biofuels to blame for 8.1% increase in grain prices
Biofuels may be responsible for 8.1 per cent of the global increase in grain prices since 2004, a smaller factor than rising global demand, oil costs and the declining dollar, according to a financial research company.
- Bloomberg
- Published: 21:41 May 24, 2008
Washington: Biofuels may be responsible for 8.1 per cent of the global increase in grain prices since 2004, a smaller factor than rising global demand, oil costs and the declining dollar, according to a financial research company.
Oil, dollar depreciation and supply factors such as drought and insufficient crop-yield gains contributed more to the 168 per cent rise in global grain costs since 2004, according to London-based New Energy Finance.
Had all other factors remained constant, oil would have sent prices up 32.5 per cent, more than four times the jump caused by biofuels, author Michael Liebreich said.
"Biofuels are driving food-price inflation, particularly in certain crops and geographies, but it is not as significant as some other factors," Liebreich said.
Biofuels are being blamed for fuelling what the US government says will be a 5.5 per cent jump in food costs this year, the most since 1989. Lawmakers have asked the Environmental Protection Agency to relax its biofuels requirements, which call for nine billion gallons of renewable-fuels production next year.
Inflation: High oil takes toll
Oil costs and export curbs are pushing food costs higher more than demand from India and China, Josef Schmidhuber of the Food and Agriculture Organization said.
Food prices "will remain high as long as oil prices remain high," Schmidhuber said.
The argument that China and India are responsible for high food costs is "with the exception of soybean imports by China, neither confirmed by their trade nor their consumption statistics," Schmidhuber said.
- Bloomberg
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