NEWS RELEASE – April 07

Why biofuels will dramatically increase feed and food costs.

The Biofuels debate is eating up the column inches and clogging the airwaves. Here Paul Poornan, the feed buyer and Chief Executive of Humphrey Feeds provides his view of why the debate needs to move on.

In the 1970s, schools taught that the world would run out of oil and food by the year 2000. The gloom and doom prediction was off by 10 years – but here we are nonetheless.

To eke out our oil reserves, politicians are advocating the processing of cereals and vegetable oils to make bioethanol and biodiesel for use in our cars. It is expected that 35% of this year’s US maize crop will be used to make 10 million gallons of Bioethanol. The Americans have built more than 100 bioethanol plants (Iowa has about 56 alone!), and President Bush is pushing for 35 billion gallons by 2017. In Europe there are similar moves to build biodiesel and bioethanol plants.

The problem is that food is being used to make fuel, at a time when the world population is growing, and both food and fuel reserves are low. Forty million tonnes of US maize will not be used for food, but for fuel this year.

The high demand for maize has meant that in the past year the price has risen from £50 to £80/tonne or 160 percent. For many of the world’s poor, that is a huge rise in food prices. So it is not surprising that there were food riots in Mexico in January this year, when 75,000 protested that they would have to spend a third of their earnings on providing their families with their basic foodstuff – the corn tortilla.

The conversion of food to fuel is not sustainable:

• if the entire US maize crop was converted to bioethanol, it would meet only 10 percent of the US’s fuel needs
• if every cereal grain in the world was converted to bioethanol, it would only keep the US supplied for 25 days
• the amount of maize (250kg) needed to produce a tankful of fuel could feed one person for 6 months (in terms of calories) so filling the tank twice a month for a year, could feed 12 people for a year
• if all the tentative UK wheat-based bioethanol plants were built, UK yields would have to increase by 30%, or imports would have to increase
• if all the vegetable oil in the world was converted to biodiesel, it would only satisfy 56 percent of US demand.

The conclusion; there is not enough land on the planet to grow all the fuel we need.

Although the “eat or drive” debate has yet to hit the public, there is a feeling that this is an interim stage to be endured prior to the development of new fuel sources, and that new technology will overtake cereal-based fuel plants.

So what will happen?

• Cereals are no longer a food, they are also a fuel, and linked to the price of oil
• The price of cereals and oil-bearing vegetable crops will rise, and so will feed and food prices
• Bioethanol and biodiesel plants will become less profitable
• New technology will eventually replace cereals and vegetable oils with woodchips, straw, grass cuttings and landfill waste
• Longer-term, feed and food prices will ease

Feed prices will inevitably continue to rise in the short term. However as food shortages remain a moral dilemma for many western governments and technology develops there may yet be a solution that provides for all as we move into the next decade.