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View Full Version : US biofuel industry says: don't blame us for food price hikes



Biofuelsimon
23rd May 2008, 10:10 PM
(automatically updated/inserted from The Big Biofuels Blog)


The US National Biodiesel Board is telling people that the rise in prices at grocery stores is down to the rise in fuel prices not down to the diversion of food crops in the US into fuel. Joe Jobe, the NBB ceo says that the Grocery Manufacturers Association is campaigning to put the blame for higher food prices on the biofuel industry (http://nbb.grassroots.com/08Releases/Food_Fuel/). This echoes a slightly vague story I reported on a couple of days ago that big food is using underground campaigning against ethanol (http://www.icis.com/blogs/biofuels/archives/2008/05/now-big-food-is-using-undergro.html). I asked the author of the original report for more clarity, but he's not managed to respond yet.

I think they are partly right. In the US (the developed world) the price of ingredients is a smaller proportion of the cost of processed food than it is in parts of the world where processed food is a luxury item. The picture is bigger than the continental landmass of the US.

Rising food prices in the US are more than likely going to be driven by the high cost of fuel, more than the ingredients.

But in a world where demand is increasing, the excess of food production over demand is falling (through drought, raising living standards AND taking grain out of the equation (http://www.icis.com/blogs/biofuels/archives/2008/02/us-ethanol-demand-for-corn-200.html) by burning the excess as fuel, one way or another), the price can only rise until demand meets supply.

Unfortunately demand for food is pretty constant and in many parts of the world wages are insufficient to pay for more expensive food grains.

We'll never know what would have happened if the US hadn't rushed into ethanol from corn as a short term fix, but it is more than possible that the price of food grains would have been lower if everything else had stayed the same.

Hattip to Domestic Fuel (http://domesticfuel.com/2008/05/22/jobe-dont-blame-biofuels-for-grocery-price-hike/)

More (from The Big Biofuels Blog)... (http://www.icis.com/blogs/biofuels/archives/2008/05/us-biofuel-industry-says-dont.html)