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Biofuels Receive Reprieve in Food Costs Debate

Report shows biofuels were not responsible for food crisis in 2007-2008.

Compiled by staff

Published: Apr 2, 2010

A new report commissioned by the UK Government has concluded that biofuels were not to blame for the so-called food crisis of 2007/2008. The report's authors say all available evidence suggests that biofuels had a relatively small contribution to the 2008 spike in agricultural commodity prices. Whilst commodity prices have fallen steeply from their peaks in 2008 biofuel demand has remained steady, indicating that the causal link from biofuel demand to short-term crop prices is still relatively weak.

The report determined that speculators responding to rapidly declining global wheat stocks caused by ongoing draught originally triggered the crisis. Furthermore, countries that panicked and imposed export restrictions on grains drove prices even higher, thereby exacerbating the situation. The simultaneous spike in crude oil prices to record levels put upward price pressure on all commodities making the food crisis a truly global event.

The report criticizes those who weighed in on the debate in 2008 saying that studies which have found a large biofuel impact across agricultural commodities have often considered too few variables, relied on statistical associations or made unrealistic or inconsistent assumptions. Bliss Baker, spokesperson for the Global Renewable Fuels Alliance, says this report puts to rest once and for all the notion that biofuels contributed to the global food crisis in 2008.

Going forward, the report is very optimistic about the world's ability to respond to both demand for biofuels and the need for additional cropland citing vast amounts of underutilized agricultural reserves around the world. According to the report, there are still vast reserves of under-utilized land in Europe and elsewhere in the world which can be brought into production under the stimulus of increased demand.

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Tagged: biofuels, wheat

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Biofuels Receive Reprieve in Food Costs Debate

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