End the Food Vs Fuel Debate

The recent drop in oil prices and global food price index should finally put an end to the food vs. food debate, writes Bliss Baker of GRFA. The price of oil and energy inputs are the most important drivers of food and commodity prices, not biofuels.
By Bliss Baker | May 13, 2015

For several years the biofuels industry has been confronted with misinformation about the role that biofuels production plays in driving up food prices and impairing food security. It has been disseminated in large part by vested interests that have been threatened by the growth of the industry.

While the industry has countered this with the facts, the recent drop in oil prices and global food price index should finally put an end to the food vs. fuel debate.

The Global Renewable Fuels Alliance has repeatedly pointed out that the price of oil and energy inputs are the single most important drivers of food and commodity prices.  For a number of years the World Bank, International Energy Agency and United Nations Food and Agriculture Organization had been under the misguided impression that food price increases were the result of increased biofuels production. They have since come to the conclusion that the biofuels industry has had a negligible impact on food prices.

The World Bank publication, “Long-Term Drivers of Food Prices,” which examined the relative contribution of various macroeconomic drivers on food price increases from 1997-’04 to 2005-’12 concluded “that most of the price increases are accounted for by crude oil prices (more than 50 percent)…” The report goes on to say, “most of the contribution to food price changes from 1997-’04 to 2005-’12 comes from the price of crude oil, which for maize and wheat is 52 percent and 64 percent, respectively.”

This long overdue “revelation” is not a surprise to the biofuels industry and the GRFA, which published the accompanying chart for the first time five years ago.  It compares the global food price index published by the UN FAO with global crude oil prices and the results are undeniable: The recent collapse of global crude oil prices has been followed by the drop in the global food price index.
It is interesting to note that this recent drop in the food price index happened while biofuels production grew to over 90 billion liters per year. 

More recently, the UN FAO concluded that biofuels have actually helped the agriculture sector over the years by stating in a recent publication that “increased agricultural productivity and output has ensured that the global supply of crops available for nonbiofuel uses has continued to grow over the long term.”

In a January speech at the Global Forum for Food and Agriculture by Jose Graziano da Silva, director general of UN FAO, he recognized biofuels as a key part of the global agriculture complex with social, agricultural and environmental benefits and the necessity for agriculture to accommodate both food and fuel. Perhaps this is a fitting end to the debate once and for all.

Author: Bliss Baker
Global Renewable Fuels Association