OECD/FAO Report: Biofuel Demand Pushing up Agric Prices

According, to a new report published by the Organisation for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization (FAO), temporary factors such as droughts in wheat-growing regions and low stocks are the major culprits of short-term hikes in farm commodity prices. Long-term changes in markets will result from reduced crop surpluses, a decline in export subsidies, and more importantly, the growing use of cereals, sugar, oilseed and vegetable oils to produce fossil fuel substitutes, ethanol and bio-diesel. Ethanol production from biofuels crops are expected to double by 2016 in the United States, the European Union, Brazil, and China.

The report points out that higher commodity prices are a particular concern for net food importing countries as well as the urban poor. Although higher feedstock prices caused by increased bio-fuel production will benefit feedstock providers, it will result in extra costs and lower incomes for farmers who need the feedstock for animal feed.

The news article is available at http://www.fao.org/newsroom/en/news/2007/1000620/index.html.