USDA: Effect of biofuels on feed prices is low
The role of ethanol production in the exploding feed prices is much
smaller than often has been said lately, the US Department of Agriculture (USDA)
In a report by the department's Economic Research Service (ERS),
factors were considered that contributed to the recent increase in food and
commodity prices. Many different causes were considered for the recent rise in
food and feed prices.
In a press conference, where also Agriculture
Schafer was present, the report was explained in detail.
about the effect of the increase of ethanol production on the corn prices, the
USDA's chief economist Joe Glauber said: " I think there's no question in
looking at the overall effect on corn prices, I think it's fair to say the
increase in biofuel production has had some effect, but again, what I'd consider
a relatively small effect and one that in looking at it it's important to take
into account a lot of other things that are going on outside of the biofuel
Glauber mentioned other causes to be more
important for the global increase in feed prices, emphasising global economic
"In fact if you were to look at countries like India and China
where the GDP there has been increasing on the order to 5 to 10% annually, that
has expanded demand, particularly demand for meat products, which has
contributed to both a growth in livestock exports in the case of this country
and also demand for protein meals, soybean meal, other sorts of things. And that
has continued and is projected to continue."
Glauber also mentioned the weather situation. "In particular,
droughts that have affected Oceania; Australia is suffering now or is just
beginning to come out of a drought that really affected the last two crops quite
adversely. We also had problems in the Canadian crop last year, problems in the
Ukraine, problems in the European Union. All contributed to a very low wheat
He also identified strong export restrictions on rice and wheat
markets, which were put in place by many countries, "to the extent that a lot
less wheat made it on to the world market than we had originally
He continued, "The other major
factor on food prices of course has been the energy costs, and the impact that
they've had on food marketing and transportation costs.
no question, biofuels also has been a very, very important part of this picture.
As I mentioned, in the US we've seen increases over the last two or three
years, and as we increase capacity and add more capacity to the ethanol
processing manufacturing sector, that we're going to see - again we're calling for about
a 33% increase in corn use in ethanol this year."
For the study to
the influence of ethanol production on feed prices, the USDA used data from Iowa
State University and University of Missouri.
He closed off, by saying
that "it's also important to realise that when these corn prices pass through to
retail prices that again is a much smaller effect." Glauber mentioned that
estimates show that total global increase in corn-based ethanol production
accounts for only about 3% of the recent increase in global food
â€¢ United States Department of Agriculture (USDA)
â€¢ Economic Research
â€¢ University of Missouri
â€¢ Iowa State University
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