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UN Report: Global Food Import Costs Rising; Biofuels Partly to Blame

7 June 2007

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FAO food price indices for 2006/2007. Click to enlarge.

Global food import bills are increasing, partly due to the soaring demand for biofuels, according to the United Nation’s Food and Agriculture Organization’s latest Food Outlook report. Global expenditures on imported foodstuffs looks set to surpass US$400 billion in 2007, almost 5% above the record of the previous year.

Rising prices of imported coarse grains and vegetable oils—the commodity groups that feature most heavily in biofuel production—account for the bulk of the increase. Import bills for these commodities are forecast to rise by as much as 13% from 2006, according to the report.

More expensive feed ingredients will lead to higher prices for meat and dairy products, raising expenditures on imports of those commodities. In several cases, such as for meat and rice, larger world purchases are likely to drive import bills up.

In the case of sugar, generally high and volatile prices could lead to smaller import volumes, which is likely to result in a drop in the cost of global sugar imports, the report said.

Record-high international freight rates have also affected the import value of all commodities, putting additional pressure on countries’ abilities to cover their food import bills.

Developing countries as a whole are anticipated to face a 9% increase in overall food import expenditures in 2007. The more economically vulnerable countries are forecast to be most affected, with total expenditures by low-income food-deficit (LIFDC) and least developed countries (LDCs) expected to rise by 10% from last year.

The food import basket for the least developed countries in 2007 is expected to cost roughly 90 percent more than it did in 2000. This is in stark contrast to the 22 percent growth in developed country import bills over the same period.

—Adam Prakash, FAO economist

World cereal production in 2007 is forecast to reach 2,125 million tonnes, up 6% from the reduced level in 2006 and higher than FAO’s previous forecast in May.

The prospect of a strong recovery in global cereal production in 2007 is a positive development, but total supplies will still be barely adequate to meet the expected rise in demand, not only from the traditional food and feed sectors but in particular from the fast-growing biofuels industry. This means prices for most cereals are likely to remain high in the coming year.

—Abdolreza Abbassian, one of the authors of the report

FAO’s tentative forecast for rice production this year stands at around 633 million tonnes, matching last year’s record level, but with production still running short of consumption. Global rice reserves are forecast to shrink and higher price levels are anticipated.

Global cassava production in 2007 could surpass last year’s record level, due largely to measures to increase utilization of the crop in the larger producing countries, especially for industrial usage, including ethanol production.

Oilseeds and meal prices have continued to rise, largely due to surging feed grain prices. Unusually high maize prices are dragging up soybean prices as the two commodities are competing in both the feed and energy markets. First forecasts for the 2007/08 marketing season suggest that the steady growth in global oilseed production could come to a halt, however, as maize cultivation is likely to expand at the expense of soybeans.

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June 7, 2007 in Biodiesel, Ethanol | Permalink | Comments (19) | TrackBack (0)

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And so it begins.........tree bark and grass clippings in our future?

I think that's a bit much, Mark.

Rice straw, wheat straw, corn stalks, forest waste and switch grass maybe, if they can get cellulose ethanol going on a large scale.

Just a couple of thoughts to throw out there.
In developed countries the cost of the ingredients is a small portion of the cost of the food. So will this hurt the poor in rich countries?
Poor countries have been hurt for decades by massive export subsidies by the Europeans and Americans. So higher commodity prices should actually help the agricultural sectors in those countries.
I'm not saying higher food prices won't leave anyone starving, but I have to wonder if higher prices are all bad news.

Great, now farmers might make more than minimun wage from now on. Then again, the cure for high prices is high prices.

Just a thought when you make ethonal the left over feedstock is a high protein feed. For cows, pigs whatever. so why is it making meat more expenceive and not less ?

The reason is simple the most important stage of cattle raising id feedlot fattening where theygain huge weight on high ENERGY foods. This means corn WITH its oils and sugars...

Around here tho meat is much cheaper as the cattle are just half a mile away and the ranchers and dairy both grow thier own corn feed...

great comedy guys, yes the poor people in other countries are paying 40% more for food so we can have our false outrage fix. Farmers make more, consumers outnumber them 100 to one.

Yah-blame the USA for high food costs,BS,Keep our money in the country and support our farms that have lacked for so long. Recycle our US dollars within and generate jobs in rural areas. It is time we take care of our own.

^ Except "our own" in cities who take the bus and are struggling to put food on the table already. Somehow people don't get teary eyed for those people. Instead, they call 'em welfare queens. Farmers on the other hand -- they're real 'Muricans.

Whatever.

Stomv, your post has done nothing to enhance this discussion. Please refrain from posting on this site again.

Cellulosic ethanol is the answer to this probelm. The government should immediatley seize investment dollars in the form of additional taxes on SUVs and use it to promote ethanol research.

The above post it not mine...Mike will be notified and I will go after your ISP if he will not.

I realize ahead of time that this sounds kind of harsh. Its not meant to say I don't sympathize with undernourished people in foreign countries ... however...

In nature generally the animals don't live where the food doesn't grow. Why then are we shipping in food? Though its not especially popular it might be easier to help them grow their own or move to where they CAN grow their own.

Thats the whole "teach a man to fish" thing. I'll support helping people be self sufficient ... but its doing them no favors to subsidize dependence and ignorance.

My grass clippings and tree bark reference was to a humorous remark by another poster on a different story earlier this week.

But back to this story, anyone who feels that setting aside farmland to grow fuel for our vehicles, instead of food for our bodies, and think it will not adversely affect our food supplies or prices, is in for a shock. This story backs me up on that. Here is another example:

http://money.cnn.com/2007/05/17/news/economy/bc.food.ethanol.prices.reut/index.htm

and another:

http://news.yahoo.com/s/csm/20070531/wl_csm/oporky

and another:

http://environmental-economics.blogspot.com/2007/03/food-to-fuel-increases-world-food.html

Its true that the leftover "waste" from ethanol is a food for cattle. But you would never want to feed your cattle this ration exclusively. Also cattle do not live exclusively in a feed lot. They are raised on some pasture somewhere, perhaps fed some sort of alfalfa or sorgum or supplemental corn silage while being pastured perhaps on a coastal burmuda pasture. This ethanol debate supply could eliminate some of those alfalfa, sorgum, corn silage fields, or these coastal pastures, adversely affecting the cost of these cattle long before they are shipped to a feedlot.

Also lets not even think about what a Katrina style weather event, or a major drought, would do to our nations farms, in delivering our food stocks.

Lets get our heads out of the sand and realize whats going on around us.

And yet another example today....

http://articles.moneycentral.msn.com/Investing/JubaksJournal/HowEthanolBitesYouInTheWallet.aspx

Ok ...

So has the increase in ethanol production in Brazil raised their food prices? Why should conversion of an export product from one form to another affect one country more than another? Have there been generally positive or negative effects in Brazil due to changes in their national renewable resource outputs (ie. Suger from suger cane vs ethanol from suger cane).

The honest answer is that its too early to REALLY know what certain changes in our economy will do to the food supply. Maybe we will start farming land which was previously laying fallow or not farmed at all! Remember that corn isn't the only feed stock you can use either. We're still on the cusp/watershed of these events.

For daily updated news on biofuels, ethanol and climate issues, please visit:

www.ethanol-news.de

The difference between the US and Brazil is that there is still so much undeveloped land here in Brazil (and I am not talking about the Amazon) that the effect of growing all that sugar cane for ethanol hasn't been felt in the prices of other commodities. On the bio-diesel side, the government in Brazil is promoting crops that can be grown on marginal land that would normally be unsuitable for food crops (i.e. castor bean, jatropha). Using corn for ethanol and soybean oil for bio-diesel is a ridicules waste of resources and is unsustainable but it does get the politicians elected.

wasn't at the boys just their where I spent a job in a hollow more than removing returned I never

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