Biofuels will be responsible 3-6 percent grain price hike in 2020 - or maybe 40 percent

Much has been said about the impact of biofuels on the food industry. The fact is that the price of some grains has risen 60 percent in the last year and quite a bit of the blame has been put on the biofuel industry.

An article signed by the Spanish Producers of Renewable Energies says that biofuels aren't responsible for this 60 percent increase, which is only a consequence of the difference between offer and demand. The Association insists that only a minimum part of grain production is made for biofuels. For instance, speaking about Spain's production levels here, Spain produces a total of 30 million tons of cereal. 23 million tons are used as animal feedstock, 4.3 million are used for human consumption and 2.2 million are used for industrial purposes (which includes biofuel manufacturing). Unfortunately, no information was given about imports.

The EU's previsions for the impact of biofuels in the cereal industry are modest. The EU estimates that in 2020, the impact of the biofuel industry could be responsible for a 3 to 6 percent increase in the price of grains, although seeds might be affected up to 18 percent. Bread prices, key to determining the impact on the consumer, are expected to be increased only 1 percent. On the other hand, Greenpeace states that prices could have a higher impact: its previsions are that corn will be 21 percent more expensive in 2010 and 40 percent in 2020 because of ethanol demand. Moreover, other plants, such as sunflower, might rise up 26 percent in 2010 and 76 percent in 2020. Wheat could be affected up to 30 percent in 2020.

The EU has great expectations in developing the so-called second generation biofuels, which are produced from current waste or byproducts. What it'll cost us is a great unknown.

Related: [Source: El Periodico via Econoticias]

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