Think tank warns biofuel will lead to rocketing food prices

Concerns over the wider impact of the booming demand for biofuels continued to grow last week after a leading agricultural think tank warned prices could soar by as much as 80 percent as land is diverted towards biofuel production.

According to an AFP report, Joachim von Braun, director general of the International Food Policy Research Institute, warned that food prices could climb by between 40 and 80 percent unless investments in improving agricultural productivity are made.

Speaking earlier this month at a conference in Manila, von Braun said that correlations between demand for biofuel and an increase in food prices were already evident and that the situation could worsen.

"If it's well managed and we have more investment in research and technology to bring up yield levels in the crops and improve the efficiency of biofuels, these price effects may only be between five and 15 percent," he observed. "So it depends on government policy."

His comments are the latest in a line of warnings from industry experts who fear that the rush to develop biofuels could have a detrimental effect on food supplies and even carbon emissions.

A major report from the UN earlier this year predicted that increased demand for biofuels could lead to deforestation and food shortages. Meanwhile other studies have argued that while biofuels claim to be carbon neutral the increased demand for fuel sources such as palm oil has led to a net increase in carbon emissions as the growth of plantations has led to deforestation of tropical rainforests.

Consequently, environmental campaigners have called for a moratorium on all biofuel targets and incentive schemes until there is greater certainty that the current trend is environmentally sustainable.

However, advocates of biofuel maintain that the emergence of so-called second generation biofuels that are significantly more efficient and based on non food crops such as wood chips or straw will ensure US and EU targets to increase biofuel use will not have a significant impact on global food prices or land use.

A recent European Commission report into the impact of its target of sourcing 10 percent of transport fuel from the biofuel sector endorsed this view, claiming that while prices of oil seed products were expected to climb by around 15 percent agricultural markets would remain stable, based on the assumption that around a third of the demand would be met by second generation fuels.

But despite such reassurances the controversy has still prompted several firms to reassess their biofuel plans. Most notably coach company National Express this month announced it was pulling out of a trial that would have seen some of its fleet running on up to 30 percent bioethanol citing fears the fuel was having a detrimental effect on the environment and world food prices.