Food price and biofuels - where's the connection?

FAO Food Price Graph_228_286

The biofuel industry represents an important outlet for UK arable production, however rational debate has been plagued by campaigns promoting a controversial ‘food vs. fuel’ debate for years. Many claim that it’s not possible to produce both and that allocating land to grow crops that might be sold for alternative uses can only lead to a rise in global food prices. The latest figures released by the UN Food and Agriculture Organisation (FAO) however paint a different picture - the monthly Food Price Index (FFPI) which is a measure of global food prices averaged 155.7 points in August 2015, it’s down 8.5 points (5.2 percent) from July and that’s the sharpest monthly drop since December 2008. At the same time global biofuel production has been steadily increasing as worldwide countries commit to renewable energy targets in a bid to tackle climate change.

The NFU has long argued that European and UK production can produce both food and fuel, whilst helping us to achieve our renewable transport fuel targets. A recent European Commission report in fact concluded the same and stated that they do not anticipate that the EU 10% renewable energy target for transport in 2020 to significantly impact global food prices and food affordability in developing countries. Their analysis found that since 2008 that any common trend between biofuel production and commodity prices ceases to exist, and the two actually move in opposite directions.

Biofuel production graph_600_419

Globally cereal and oilseed stocks are high and despite earlier concerns for 2015/16 many production forecasts have been revised upwards, confidence in these revisions is plain for all to see in the falling prices on international markets. If we were ever to enter a period of shortage crops earmarked for biofuel production could be easily and quickly reallocated into the food chain, hence they effectively act as a buffer. What the biofuel market does is give security to farmers that markets exist for their products and this confidence allows them to manage volatility and make better informed business decisions for on farm investment and budgeting. As a result the NFU has been active in this area and has been lobbying at the highest levels in the UK and in Brussels to ensure the biofuel markets remain open and incentivised against movements by oil cartels to destabilise supplies of energy that might compete with their hydrocarbons. Biofuel production also produces a valuable co-product in the form of high protein animal feed, where the UK has a deficit of around 70% for, and increases in production would allow us to begin closing down this gap.

‘Food vs fuel’ isn’t the only controversial claim levelled at biofuels, there is a widely documented debate about the flawed assumption of ‘indirect land use change’ (ILUC) that is claimed occours as a result of involving  agricultural feedstocks in fuel production. This has eventually led to a ruling in the European Parliament which limits the volume of crops used in biofuel production to 7%. The NFU lobbied hard against this political amendment and these recent FAO figures only back up our argument - that it is possible to sustainably produce both food and fuel across the world. As ‘ILUC’ has been impossible to prove, the NFU is still active in this area and through our membership of the European Oilseeds Alliance we continue to work with the European Commission on their assumptions and support evidence-based policymaking on questions behind ILUC.


Last edited on: 11:09:2015

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  • Posted by: Lars AlmstromPosted on: 12/11/2015 15:23:17

    Comment: Just one word about "A recent European Commission report in fact concluded the same and stated that they do not anticipate that the EU 10% renewable energy target for transport in 2020 to significantly impact global food prices and food affordability in developing countries." Indonesia ...?

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