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Growing bio-fuel demand underpinning
higher agriculture prices - Report
Accra, July 4, Ghanadot/GNA - Increased demand for bio-fuels
is causing fundamental changes to agricultural markets that
could drive up world prices for many farm products,
according to a new report published by the OECD and FAO.
The OECD-FAO Agricultural Outlook 2007-2016 said temporary
factors such as droughts in wheat-growing regions and low
stocks explain in large measure the recent hikes in farm
commodity prices.
But when the focus turns to the longer term, structural
changes are underway, which could well maintain relatively
high nominal prices for many agricultural products over the
coming decade, a report released in Accra on Wednesday.
“Reduced crop surpluses and a decline in export subsidies
are also contributing to these long-term changes in markets.
But more important is the growing use of cereals, sugar,
oilseed and vegetable oils to produce fossil fuel
substitutes, ethanol and bio-diesel,” it said.
“This is underpinning crop prices and, indirectly through
higher animal feed costs, also the prices for livestock
products.”
The report said in the United States, annual maize-based
ethanol output was expected to double between 2006 and 2016.
It said in the European Union the amount of oilseeds (mainly
rapeseed) used for bio-fuels was set to grow from just over
10 million tonnes to 21 million tonnes over the same period.
The report pointed out that higher commodity prices were a
particular concern for net food importing countries as well
as the urban poor.
“And while higher feedstock prices caused by increased
bio-fuel production benefits feedstock producers, it means
extra costs and lower incomes for farmers who need the
feedstock to provide animal feed.”
The Outlook also said trade patterns were changing.
“Production and consumption of agricultural products in
general will grow faster in the developing countries than in
the developed economies - especially for beef, pork, butter,
skimmed milk powder and sugar. OECD countries are expected
to lose export shares for nearly all the main farm
commodities.”
Nevertheless, it said, they continued to dominate exports
for wheat, coarse grains and dairy products.
The report said world agricultural trade, measured by global
imports, was expected to grow for all the main commodities
covered in the Outlook, but likely by less than for
non-agricultural trade, as import protection is assumed to
continue to limit the growth in trade.
Nevertheless, trade in beef, pork and whole milk powder was
expected to grow by more than 50 percent over the next 10
years, coarse grains trade by 13 percent and wheat by 17
percent. Trade in vegetable oils was projected to increase
by nearly 70 percent, it added.
GNA
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