Demand for biofuels as an alternative to fossil fuels will continue to be one of the significant factors that could see food prices soaring dramatically again in the near future, says an industry source.
In late 2007 to mid-2008, the world witnessed a “silent tsunami” of rising food costs that resulted to social tensions and riots across 22 countries, pushing over 100 million people into hunger, according to the United Nations World Food Programme (UN-WFP).
The World Bank also estimated that growing crops for biofuel have forced global food prices to increase by 75 per cent.
Sudhakar Tomar, chairperson of the World Pulses Oganisation (Cicils Iptic), says developed countries have committed to produce 200 billion barrels of biofuels by 2018.
“To produce that amount of biofuel, you need to grow more corn, soya, rapeseed and sugar,” he said.
Tomar explained that biofuel demand has been a natural reaction to high costs of crude oil, which is currently pegged at around $80 per barrel. Oil prices surged to its all-time high of $148 a barrel in July 2008.
“Until such time that oil remains high, there will always be the incentive to burn food for fuel. This is a trend that we can only try to contain, but cannot remove,” he said.
However, Tomar admitted that the nature of the food price crisis similar to that experienced in 2007 is a controversial issue that cannot be dealt with in isolation.
Aside from biofuel production, other factors such as climate change and unequal distribution of food supplies could spur another “agflation” or the sudden increase in the cost of agrarian commodities.
“We believe there’s sufficient supply of food in the world. It’s just a question of distributing it equally across the regions. The 2007 food price crisis didn’t happen overnight. But if the governments of the world have the correct system of distribution in place, a similar crisis could be avoided in the future,” he said.
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