Biofuels No Conflict with Food Prices

The Biofuels Association of Australia today highlighted a new report commissioned by the UK Government which has unequivocally concluded that biofuels was not to blame for the so-called food crisis of 2007/2008. The full report can be found at here (This link will open a PDF in a new window).

The report,“The role of demand for biofuel in the agricultural commodity price spikes of 2007/08″, determined that speculators responding to rapidly declining global wheat stocks caused by ongoing drought originally triggered the crisis. Furthermore, countries that panicked and imposed export restrictions on grains actually drove prices even higher, thereby exacerbating the situation. The simultaneous spike in crude oil prices to record levels put upward price pressure on all commodities making the food crisis a truly global event.

This food crisis event in 2008 allowed critics of ethanol to unfairly make an easy scapegoat of the industry during a period of unprecedented expansion in ethanol production. The report found that oil prices played a significant role in driving agricultural costs up, a point the ethanol industry has routinely made. “Fuel and fertiliser accounts for over half of operating costs of crop farms but many commentators ignored oil’s ongoing importance as an input into agricultural production,” the UK report concluded.

The report further criticized “commentators” such as the UN, World Bank and International Monetary Fund, who weighed into this debate in 2008 saying, “studies which have found a large biofuel impact across agricultural commodities have often considered too few variables, relied on statistical associations or made unrealistic or inconsistent assumptions.”

“This report puts to rest once and for all the notion that biofuels contributed to the global food crisis in 2008,” said Biofuels Association of Australia CEO, Heather Brodie. “This is a lesson for us all about the danger of looking for an easy answer, not necessarily the right answer.”

The report is very optimistic about the world’s ability to respond to both demand for biofuels and the need for additional cropland citing vast amounts of under utilized agricultural reserves around the world.

“We need to recognise that locally produced, environmentally sustainable and economically viable transport fuels will be necessary in order to meet fuel demands in the future” Ms Brodie said