Bio-fuel to increase food and feed prices

The ever-increasing cost of oil is prompting the use of alternative energy sources. Besides the focus on wind and solar energy, interest in bio-fuel is also on the increase.

Lester Brown, director of the US-based Earth Policy Institute, foresees problems for the human food chain if more and more grains, soybeans and sugar cane are used for the production of bio-energy. This year, the global demand for grains and beans has increased by 20 million tonnes. The US ethanol distilleries and bio-diesel refineries will use 14 million tonnes of it.

One has to realise, Brown says, that one SUV will consume each year enough grains to feed 26 people. Since most of our basic food ingredients, grains, sugar, palm oil, rice and soybeans, can be used to produce bio-fuels, the cost of crude oil becomes an important issue for the feed and food industry.

Food giant Unilever has already warned European authorities that permitting higher levels of bio-fuels for cars could end in disaster for food supply.

The use of high quantities of rape seed (an important ingredient for margarine production) for bio-fuel production is a particular concern. The price of rape seed has increased by 30 percent in the past year and may increase further this year, which ultimately will have consequences for the consumer price of foods.

The issue of bio-fuels is an interesting one for the agri-industry. On one hand, farmers can get a better price for their grains, and on the other hand farmers have to pay more for the feeds they need for their animals. The poultry industry will have to accept that feed prices may go up, while the price of the final product can marginally be increased, so as not to lose too many consumers.

For that reason, it may be interesting to have a closer look at how the poultry industry can contribute to bio-fuel or alternative energy sources, so it can profit from the increasing oil (energy) prices as well.