Friday, August 10, 2012

[biofuelwatch] Brazilian FAO CEO calls for suspension biofuel targets

FYI, apologies for cross-postings.
(Please note, the Brazilian Government has always blocked any questioning of biofuels at intergovernmental meetings, including in particular the Convention on Biodiversity, which has another tough discussion on biofuels coming up at its next Conference of the Parties in October)

Begin forwarded message:

Subject: {Agrofuels EU} more articles on food prices and biofuels mandate in the UE
Date: August 10, 2012 7:02:34 AM GMT-04:00

FYI, editorial in the FT below and the BBC story:

The US must take biofuel action to prevent a food crisis

By José Graziano da Silva

The worst drought for 50 years is inflicting huge damage on the US
maize crop, with serious consequences for the overall international
food supply.

The situation reminds us that even the most advanced agricultural
systems are subject to the vagaries of the weather, leading to
volatility in supplies and prices not just on domestic markets but
also internationally. Climate change and extreme weather events will
further complicate the picture.


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US maize production had been expected to increase to record levels
this year. That view will prove optimistic. Much of the reduced crop
will be claimed by biofuel production in line with US federal
mandates, leaving even less for food and feed markets. The August US
Department of Agriculture estimates, announced on Friday, will give a
more precise idea for just how much the maize crop is reduced. Few
people are expecting good news.

Maize prices have already gone higher than their 2008 and 2011 peaks,
increasing by 23 per cent during July alone. Wheat prices have
followed maize prices upwards. Repercussions are already being felt in
the US livestock sector.

Unsurprisingly, the media has started talking about the possibility of
a food crisis. Whether that happens depends not only on how long the
drought lasts and how much damage it does to crops but on how far its
impact spreads to other markets, whether there are further supply
shocks and how countries react to the price movements.

In 2007-08 governments tended to react in a disorganised and erratic
manner, which often accentuated global price rises, as was the case
with the imposition of export restraints. Often the measures were not
even effective in meeting the objective of stabilising domestic
prices, as they often led to panic buying and hoarding.

Given all this, governments should be cautious, especially considering
that high prices are not necessarily negative. Attractive producer
prices will be needed in the coming months to entice producers to
embark on a much needed increase of crop cultivation, especially in
the southern hemisphere.

Some governments will be called to take a number of steps to alleviate
the impact of the situation on the poorest consumers, for example
through the targeted distribution of food at subsidised prices,
increased reliance on non-commodities crops such as roots, tubers, and
beans, and assisting small producers to get better seeds and other
basic inputs. Over the longer term, strategies to increase local
production and self-sufficiency should be implemented.

Fortunately rice supplies in 2012 are plentiful and rice prices
stable, but they could also be driven higher by increasing prices of
other cereals. Rice market stocks were also not problematic in 2007-08
but prices nevertheless increased dramatically. A lack of transparency
and unco-ordinated unilateral actions by importing and exporting
countries and media coverage all contributed to creating panic.

With world prices of cereals rising, the competition between the food,
feed and fuel sectors for crops such as maize, sugar and oilseeds is
likely to intensify. One way to alleviate some of the tension would be
to lower or temporarily suspend the mandates on biofuels. At the
moment, the renewable energy production in the US is reported to have
reached 15.2bn gallons in 2012, for which it used the equivalent of
some 121.9m tonnes or about 40 per cent of US maize production. An
immediate, temporary suspension of that mandate would give some
respite to the market and allow more of the crop to be channelled
towards food and feed uses.

The US drought leaves global markets highly vulnerable to any further
supply side shocks. While the current situation is precarious and
could deteriorate further if unfavourable weather conditions persist,
it is not a crisis yet. Countries and the UN are better equipped than
in 2007-08 to face high food prices, with the introduction of its
Agricultural Market Information System, which promotes co-ordination
of policy responses.

However, risks are high and the wrong responses to the current
situation could create it. It is vitally important that any unilateral
policy reactions from countries, whether importers or exporters, do
not further destabilise the situation.

The writer is the director-general of the Food and Agricultural
Organization of the UN

Nusa Urbancic
Programme Manager Fuels
Transport & Environment
26, rue d'Edimbourg, Brussels

t.+32 (0)28930846 | m. +32 (0)488574418

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