Biofuels not responsible for food crisis?

[PointRadix]

Commodity Online - 2008-04-26

Speculative buying rather than diversion of food crops and oil seeds for biofuels has resulted in skyrocketing commodity prices, according to an analytical firm.

F O Licht opined that reports blaming increased biofuels production for the present food grain crisis are exaggerated and the share of oil seeds and grains in the total global usage for biofuels is limited.

In 2007, 4.5% of global grain usage was to make fuel alcohol and 3.3% in 2006. However, once animal feed biofuel co-products are factored in, those figures fall to 3% for 2007 and 2.2% for 2006, F.O. Licht said.

The price increases in wheat, corn and oil seeds over the past year could be due to speculative buying and higher energy costs for agricultural production. Increases in prices were also due to “the often-repeated assumption that the expanding biofuels sector was boosting these markets,” F.O. Licht said. However, the report added the influence of biodiesel on the global vegetable oil market was more significant, with some 5.9% of total supplies used to make biodiesel, up from 3.7% in 2006.

Source: Biofuels not responsible for food crisis: report