Biofuels expansion 'driving up prices of food and drink'
Mon 26 February 2007
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The expansion of biofuels production is beginning to put upward pressure on prices of products used for food and drink according to various press reports.
In Mexico, Reuters reports that there have been protests against rising tortilla prices - a staple food for Mexicans - at least partly driven by the demand for maize as a biofuels feedstock.
According to the Financial Times, strong demand for biofuel feedstocks such as corn, soyabeans and rapeseed is encouraging farmers to plant these crops instead of grains like barley, used in beer production, and is driving up prices.
The FT quotes the chief executive of Heineken, the Dutch brewer, who warned that the expansion of the biofuel sector was beginning to cause a structural shift in European and US agricultural markets. He said that one result could be a long-term shift upwards in the price of beer as barley and hops account for about 7-8 per cent of brewing costs.
Barley prices have risen rapidly in the last year, partly because land that was used to grow barley in the US has been switched to corn because of fising ethanol demand, according to a grains trade analyst interviewed by the FT. The Independent newspaper also led this month with a front page piece on the switch to biofuels and their impact on planet's resources.
In further developments, on 8 March EU heads of governments adopted a mandatory 10% biofuels target for 2020 following a recommendation made by the European Commission in January.
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