Biofuels push food prices higher

Over the last week there have been a number of articles in the news on the impact of higher commodity prices on the price of food due to the world wide demand for biofuels. Of course Australia is not immune from this phenomenon but for the moment the focus seems to be on the impact of biofuels on overseas food prices.

The Age reports that pasta prices in Italy are rising because farmers are no longer growing durum wheat, the main ingredient in good pasta. Large numbers of demoralised Italian farmers are apparently starting to growing crops for the biofuel industry rather than for food.

Higher corn prices in the US have seen the staple tortilla become much more expensive in Mexico and there is now an ever growing awareness in the US on the impact of biodiesel and corn based ethanol production on food prices. Despite this the commissioning of new biofuels production plants continues apace in the US.

Now we read that wheat farmers in Western Australia will soon have the option of selling their grain to a number of ethanol producers who planning to build production facilities in WA. First it was Grainol (previous post) and now the Mingenew Irwin Group are planning to lure farmers away from the export market.

With the OECD-FAO Agricultural Outlook 2007-201 reporting that the world’s increasing appetite for biofuels is likely to keep agricultural prices high for the next decade, the fuel versus food debate is destined to continue.

Source: The Age, OECD via FarmOnline, ABC Online

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