UN: Biofuels Push Up Food Bills

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From Food Outlook, June 1 2007, published by the UN Food and Agriculture Organization

Based on FAO’s latest analysis, global expenditures on imported foodstuffs look set to surpass US$ 400 billion in 2007, almost 5 percent above the record of the previous year. The bulk of the increase can be levelled against rising prices of imported coarse grains and vegetable oils – the commodity groups which feature most heavily in bio-fuel production. Import bills for these commodities are forecast to rise by as much as 13 percent from 2006. More expensive feed ingredients will lead to higher prices for meat and dairy products, raising the expenditures on imports of those commodities. In several cases, such as meat and rice, the import bills are likely to be driven higher also because of larger world purchases. On the other hand, in the case of sugar, generally high and volatile prices could lead to smaller import volumes, the net effect of which is likely to be a drop in the cost of global sugar imports. The rise of international freight rates to new highs also affected the import value of all commodities, putting additional pressure on countries ability to cover their food import bills Among economic groups, developing countries as a whole are anticipated to face a 9 percent increase in aggregate food import expenditures in 2007. The more economically vulnerable countries are forecast to be most affected, with total expenditures by LIFDCs and LDCs anticipated to rise by 10 percent each from last year. To put matters in further perspective, the annual food import basket for LDCs in 2007 is expected to cost roughly 90 percent more than it did in 2000, which is in stark contrast to the 22 percent growth in developed country import bills over the same period.