Global Renewable Fuels Alliance

Global Renewable Fuels Alliance

March 07, 2011 15:30 ET

UN FAO Confirms Rising Energy Prices Driving Up Food Costs

TORONTO, ONTARIO--(Marketwire - March 7, 2011) - The United Nations Food and Agricultural Organization (UN FAO) confirmed Friday that crude oil prices are driving up food costs globally. As the world witnesses history being made in the Middle East, the UN FAO's food price index hit an all time high in February 2011, driven by the recent hike in oil prices according the UN FAO.

David Hallam, the Director of Trade and Market Division for the United Nations Food and Agricultural Organization confirmed last week that "unexpected oil price spikes could further exacerbate an already precarious situation in food markets."

The following chart clearly outlines the strong correlation between the UN FAO's food price index and oil prices globally.

To view the chart, please visit the following link:

"The last time we saw food price inflation like we are seeing today, oil was peaking at $147 per barrel in 2008," said Bliss Baker, spokesperson for the Global Renewable Fuels Alliance. "We are witnessing a similar situation today – as crude oil prices climb so does the price of food," added Mr. Baker.

Food vs. Oil Quick Facts:

  • Data going back 30 years shows that the price of oil has driven the price of food and key grains making prices directly proportional. 
  • When shocks to the price of oil occur, the cost of food and key grains has followed suit. When oil prices spiked in the early 1980s, corn and rice also rose to new highs. When oil shot to more than $140 per barrel in 2008, crop prices also spiked to an all-time high, driving the FAO Food Index higher as well.
  • Expert studies of price fluctuations in 2008 have echoed the conclusion of the U.K. Department of Environment, Food and Rural Affairs which ascribed the cause of agricultural commodities largely to energy prices and market speculators saying, 'biofuels has a relatively small contribution."
  • Only 3.5% of global grain production is used to produce renewable fuels such as ethanol. Ethanol produced from corn only uses the starch from the grain, the remaining protein, fat and minerals is used in animal feed. 
  • Renewable fuels help diversify the energy mix, making us less dependent on fossil fuels and, by extension, less vulnerable to energy price shocks.

The Global Renewable Fuels Alliance is a non-profit organization dedicated to promoting biofuel friendly policies internationally. Alliance members represent over 65% of the global biofuels production from 44 countries. Through the development of new technologies and best practices, the Alliance members are committed to producing renewable fuels with the smallest possible footprint.

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