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In the environment of rising oil prices and issues of climate change looming large, rich countries needed to wean themselves off dependence on fossil fuels.Biofuels seemed like a sure winner – firstly, because supporting biofuels meant supporting domestic agricultural industries.Although this demand comprises a relatively small portion of total crop demand, about 5.5 percent, the report adds that biofuel production will remain a key driver of strong agriculture demand growth in the coming years, primarily owing to government policies for biofuel usage.Most of the countries with biofuel production and usage policies are in the northern hemisphere while the most efficient crops for production are in the southern hemisphere.The growth of the biofuel industry has triggered increases not only in the prices of corn, oilseeds, and other grains but also in the prices of seemingly unrelated crops and products.The use of land to grow corn for ethanol is reducing the acreage devoted to other crops.Fuel-friendly Policies over Food Security A Goldman Sachs report says that forty-one countries are currently pursuing policies to promote the use of biofuels over the next decade.If implemented in full, these policies would increase global biofuel demand from 10 billion gallons per year in 2005 to 25 billion gallons per year by 2010, a 20 percent annualized growth rate.
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While well intended, these across-the-board policies have had major implications on the world’s food supply as our food needs become increasingly tied to our energy needs. Biofuels come from various sources – ethanol from corn, sugar beets or sugarcane, oils from seeds and grains such as the oil palm, rapeseed or soybean.