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News Admin
 
Date
 27/03/2006
News Provider
 Mahamad Rodzi Abdul Ghani
News Source
 Reuters
Headline
 EU BIODIESEL GROWRH SEEN SPARKING FOOD PRICE RISE

 LONDON, March 24 (Reuters) - Rapid expansion of European Union biofuels production will lead to higher and more volatile food prices, imposing a financial burden on poor countries, an economist with a leading grain trading company said on Friday.
   "Food will be forced very often to buy back acreage (from energy crops) by higher prices...the food importing bill for developing countries will be significantly higher," Klaus-Dieter Schumacher, head of economics for Toepfer International told a conference organised by Agra-Europe.
   The European Union currently encourages biofuels production through voluntary targets which include a goal that 5.75 percent of motor fuel should come from renewable sources by 2010.
   Estimates for current use range from about 0.4 to 1.4 percent.
   Member states have sought to meet non-binding targets through a variety of means, including tax incentives, and the biofuels industry has been calling for mandatory targets for blending of biofuels into conventional fuels to apply in all member states.
   "The best way forward is an obligation (mandatory blending)," Robert Vierhout, secretary-general of the European Bioethanol Fuel Association, told the conference, noting the industry was hampered by the breadth of different incentive schemes.
   "The EU bioethanol fuel market is progressing but it is not fast enough," he added.
   Schumacher said that if the European Union adopted a mandatory 5.75 percent blending of biofuels into conventional fuels in 2010, then 28-30 million tonnes of grain would be needed to produce bioethanol.
   Bioethanol, make from grains, sugar cane or sugar beet, can be blended with petrol while biodiesel can be made from vegetable oils or tallow and blended with conventional diesel.
   Schumacher said economics meant most of the bioethanol would be produced from wheat, with little expected to come from sugar beet. He projected wheat use at about 28.4 million tonnes in 2010, or around 23 percent of expected EU output that year.
   Schumacher said more than 80 percent of European biodiesel output last year was produced from EU rapeseed oil, although that percentage was expected to drop as the market grew, with more use of imported palm oil and soyoil.
   He said the threat of high and volatile food prices as a result of a growth in biofuels use raised questions about the whether biofuel should be the focus of research efforts.
   Raffaello Garofalo, secretary-general of the European federation of biodiesel producers, agreed that biodiesel imports would grow as consumption expanded.
   "If imports stay at one quarter and not more than one quarter this could be politically acceptable in Europe," he said, adding that member states' willingness to provide financial support might be jeopardised if imports became too high.


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