UN FAO data shows ethanol is not causing food price rise, says GFRA

September 13, 2015 |

The Global Renewable Fuels Alliance is highlighting data from the UN FAO showing that global food prices have experienced the steepest monthly drop since 2008, casting doubt upon concerns about the impact of ethanol production in food price increases.

The recent decline in food prices has coincided with a period of record ethanol production expansion, reaching a high of 94 billion litres in 2014 from 83.5 billion litres in 2012, a 10% increase over this period.

The UN FAO Food Price Index averaged 155.7 points in August, down 5.2% from July, representing the steepest monthly drop since December 2008 with virtually all major food commodities registering marked dips. This drop coincides with a fall in crude oil prices in July of 19%, closing at $48.25USD per barrel on July 31.

A 2013 World Bank publication, Long-Term Drivers of Food Prices, concluded that almost two-thirds of food price increases are caused by rising oil prices. The report states that between 1997-2012 the price of crude oil caused maize and wheat prices to increase by 52 percent and 64 percent, respectively. The report also found that biofuels had a negligible impact on food prices during this period.

“The Global Renewable Fuels Alliance has for several years argued that the price of oil and energy inputs are the single most influential drivers of food and commodity prices,” the GFRA stated. “A number of international institutions including the World Bank, International Energy Agency and United Nations Food and Agriculture Organization have also recognised the strong relationship between oil prices and food prices.”

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Category: Fuels

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