World Bank blames biofuels for rising food prices

The World Bank’s Development Prospects Group blames biofuels for rising food prices. For me the key passages in the 21page pdf are these.

The United States is the largest producer of ethanol from maize and is expected to use

about 81 million tons for ethanol in the 2007/08 crop year. Canada, China and the

European Union used roughly an additional 5 million tons of maize for ethanol in 2007

(USDA 2008a), bringing the total use of maize for ethanol to 86 million tons, which was

about 11 percent of global maize production. The large use of maize for ethanol in the

U.S. has important global implications, because the U.S. accounts for about one-third of

global maize production and two-thirds of global exports and used 25 percent of its

production for ethanol in 2007/08.

Global grain production did decline by 1.3 percent in 2006 but it then increased 4.7 percent in 2007. Thus the production shortfall in grains would not, by itself, have been a major contributor to the increase in grain prices. But when combined with large increases in biofuels production, land use changes, and stock declines it undoubtedly contributed to higher prices.

Rapid income growth in developing countries has not led to large increases in global

grain consumption and was not a major factor responsible for the large grain price

increases. However, it has contributed to increased oilseed demand and higher oilseed

prices as China increased soybean imports for its livestock and poultry industry. Both

China and India have been net grain exporters since 2000, although exports have declined

as consumption has increased.

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2 Responses to World Bank blames biofuels for rising food prices

  1. larry hagedon 22 August, 2008 at 12:37 am #

    These guys must not understand that when we make the ethanol from corn, we have a large portion of the corn left over for other products.

    In fact the more corn we grow for ethanol, the more left over portions of the corn kernel that we have to make into human foods, pharmaceuticals, industrial chemicals, other fuels besides ethanol and animal feed.

    corn co-products of ethanol include; High Fructose Corn Syrup, Corn Syrup, Dextrose, Crude Corn Oil, Corn Gluten Meal, Sweet Bran®, Dry Sweetners, Acidulants, Citric Acid, Anhydrous Citric Acid, Liquid Citric Acid, Sodium Citrate, Potassium Citrate, Itaconic Acid, Natural Vitamin E, D-Alpha Tocopheryl Acetate, Mixed Tocopherols, Phytosterols, FFA, Citrous Salt, CO2, Monosodium Glutamate, Threonine and Cyclodextrins, bio-diesel. There are many more.

    We make surpluses of most all these co-products of ethanol and we export them for additional revenue streams.

    It is ludicrous to claim that making ethanol from corn reduces supply and increases costs of food. It is exactly the opposite in fact.

    The more corn we grow for ethanol, the more food co-products we have to market.

    Corn prices and all other commodities went up as petroleum went up in price.

    larry hagedon

  2. Simon Robinson 22 August, 2008 at 9:59 am #

    Hi Larry,

    Fundamentally, if you are so poor that you have to buy grains for food and process them at home you are not going to be able to afford products that include the list of great things that can be extracted from distillers grains.

    The mass of distillers grains at the end of fermentation will be less than the mass of coorn at the start of the process.

    There is a global supply and demand problem, and it is fundamentally simple, if demand for ethanol from corn increases faster than the corn harvest then there will be less food for people because of the mass of corn that is used to make ethanol.

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