UN calls for review of biofuels mandates amid high food prices

04 September 2012 18:56  [Source: ICIS news]

LONDON (ICIS)--The UN has strengthened its call for a review of the use of grains in biofuels to mitigate global food price shocks, the organisation said on Tuesday.

The joint statement from three UN agencies asks governments to consider adjusting biofuel mandates such as those used by the US for ethanol and by Europe for biodiesel, as prices for corn, wheat and soybeans rose sharply in the last month on the back of poor harvests in the US, Russia and parts of Europe.

The report said increased diversion of food stock for non-food purposes and increased financial speculation on food commodities are among the various drivers of increased price levels and volatility.

However, a European biodiesel trader said on Tuesday the announcement was unlikely to have an impact on the market in the short-term.

“There was no talk at all [about the UN report], it is not exactly a new topic and there will not be many price implications.”

The report said the current situation in world food markets, characterised by sharp increases corn, wheat and soybeans, has raised fears of a repeat of the 2007-2008 world food crisis.

It said the UN aims not only to tackle the impact of high food prices on poorer nations dependent on imports, but also address the long-term issue of how to produce, trade and consume food.

However, the report said weather has been the primary driver of the three international food price spikes in the past five years.

Food and Agriculture Organisation (FAO) Director-General José Graziano da Silva will speak on Thursday, 6 September, regarding the September 2012 FAO Food Price Index and the latest FAO Cereal Supply and Demand Brief.

Published every month, the FAO Food Price Index measures the monthly change in the international prices of a basket of food commodities. The August Index rebounded sharply after three months of decline.

($1 = €0.79)

By: Kate Wilcock
+44 208 652 3214

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