As the general enthusiasm for biofuels continues to accelerate unabated (most recently with the climate change deal secured at the EU Council of Ministers by Angela Merkel), a sage warning comes from US Department of Agriculture chief economist Keith Collins: all this biofuel-led demand for grain is going to have a big impact on food prices.
“Feed prices are rising, so that pushes up the costs of poultry, hogs and cattle and therefore a rancher is going to lower the size of his herd to keep costs down. In turn there is going to be less meat, which means prices are going to go up,” said Mr Collins, who is responsible for the USDA’s agricultural forecasts and is adviser to Mike Johanns, the US secretary of agriculture.
However, Mr Collins said consumers would be able to withstand the effect of higher food prices.
Well, US consumers, yes: but for poor consumers in low income countries dependent on grain imports, the impact of soaring biofuel markets in the west may become a major problem, particularly when combined with rising global population, rising affluence in emerging economies and reduced yields as a result of climate change and water depletion.
And as Earth Policy Institute head Lester Brown notes in his book Plan B 2.0, all this has significant geopolitical implications:
“As the demand for farm commodities climbs, it isshifting the focus of international trade concerns from the traditional goal of assured access to markets to one of assured access to supplies … in the future, the issue will be who gets access to not only Middle Eastern oil but also Brazilian ethanol and North American grain.”
