August 15, 2007

 

Bio-fuel demand could push grain crop prices 40 percent higher by 2020
 

 

The price of grains used to produce bio-fuels could jump by up to 40 percent by 2020, pushing food prices higher by reducing availability, Joachim von Braun, director general of the International Food Policy Research Institute, or Ifpri, said Wednesday (Aug 15).

 

Bio-fuels production could increasingly divert land, water, capital and political attention away from the production of food and animal feed, he said.

 

Current plans for bio-fuels production point to price increases of 5 percent to 15 percent for various crops, but aggressive growth in output could lead to greater prices rises, he said, citing new analyses from Ifpri.

 

"By 2020, prices for grain crops could increase by 20 percent to 40 percent over and above other causes for price hikes, including increased demand from the growing and wealthier populations of developing countries," von Braun told a bio-fuels, energy and agriculture conference.

 

Such price increases would pose difficulties for many of the world's more than one billion poor people who earn only a US dollar a day and typically spend at least half this on food, he said.

 

However, with many countries planning to meet 10 percent to 20 percent of their transport fuel needs with bioenergy in the next 10 years, production of bio-fuels could also potentially create substantial opportunities for the world's farmers, he commented.

 

These include providing farmers with uses for crop residues and increasing demand generally for farm products resulting in higher incomes for farmers, while boosting rural employment, von Braun said.

 

Washington DC-based Ifpri is one of 15 research organisations supported by the Consultative Group on International Agricultural Research, an alliance of 64 governments, private foundations and other groups.

 

Meanwhile, Ron Oxburgh, chairman of British-based biodiesel producer D1 Oils and a former chairman of Royal Dutch Shell PLC, told the conference that in the longer term, bio-fuels will become a fuel of choice on cost and sustainability grounds.

 

He argued against lumping all bio-fuels together, saying that present day products, which come largely from food crops such as corn, other grains and sugar cane, do not offer a long-term solution, but the next generation of bio-fuels do.

 

Second generation bio-fuels will use the organic or plant-derived component of what is traditionally thrown away as urban rubbish, he said.

 

These include cardboard waste, grass cuttings, agricultural byproducts such as straw, forestry trimmings and the like, and ultimately sewage sludge, he said.

 

"The other path to future bio-fuels is by breeding special crops that can grow on marginal land where food crops would struggle," such as Jatropha curcas, which is used by D1 Oils to make biodiesel, he said.

 

Stephen Schuck, an executive committee member and Australia's member on the International Energy Agency's bioenergy programme, said technologies for producing first generation bio-fuels are generally mature and commercially available.

 

Technology development now has moved on to second generation bio-fuels.

 

These use a wider range of feedstocks such as woody wastes and farm residues, and alternative processing methods to lower costs and increase yields, he said.