INCREASING production of biofuels has long been attributed to higher grain prices that cause global food shortages and price spikes and push up livestock feed costs.
But research by Canadian commodity group The Grain Farmers of Ontario has found biofuels are not the prime reason for grain price spikes, and the savings generated through use of biofuels are greater than any food cost increases for consumers.
While biofuels have long been a growing market - and originally considered graingrowers' major growth market of the future - it could be surpassed by demand for bioproducts.
Bioproducts include use of grain in bioplastics and composites, coatings, adhesives and lubricants, particularly in the automotive and construction industries.
Total global production of bioproducts is about $1 billion to $2b a year and is expected to be $20b by 2020 as it taps into the world's $1 trillion plastic market.
Canadian graingrowers are well on the way to feeding this fledgling market and are world leaders in developing and commercialising technology to convert crops such as corn, soybeans and wheat into everyday non-food products (see side story).
GFO commissioned a study into the effects of the demand for grain because of biofuels and bioproducts on the environment, crop and food prices and world hunger.
While grain price spikes in 2007-08 and 2010-11 were good for graingrowers, they were bad for buyers, who pinned the cause as excessive quantities of biofuels.
Global ethanol production is at 100 billion litres from 125 million tonnes of corn, or 15pc of the world's corn. This is 5 per cent of global petrol supply with 60pc used in the US.
There is 11bL of biodiesel produced globally, less than 1pc of the global diesel supply. Up to 75pc of that is from rapeseed in the European Union.
As part of the study, former University of Guelph, Ontario, professor of crop science Terry Daynard compared grain supply and prices from the 1970s - where biofuel production was not an issue - and more recent 2007-08 and 2010-11 crises, drawing on data on from the United Nations' Food and Agriculture Organisation and the United States Department of Agriculture.
Speaking at last month's International Federation of Agricultural Journalists Congress in Canada, he said recent spikes had been caused by poor and small wheat crops in Europe, export restrictions on wheat and rice, panic buying and hoarding, high oil prices, speculation by commodity futures traders and currency fluctuations.
The overall impact of biofuels was minimal - only 0.5 to 0.8pc of the 5.1pc food price increase in 2008. This equated to $35-$60 increase in food costs per year compared with up to a $180 saving/year because of biofuel supply - proving the savings from biofuels were greater than food price increases.
But Mr Daynard said farmers should not think that feeding a global population of 9b by 2050 - plus demand for biofuels and bioproducts - automatically meant high grain prices were here to stay. Past experience had shown higher grain prices and concern about future food supply were followed by ample production and low prices.
*Full report in Stock Journal, October 13 issue.
* Deanna Lush attended the International Federation of Agricultural Journalists annual congress in Canada as recipient of the 2011 Alltech Young Leader in Rural Journalism Award.
