Which will be more important in the future, Gas or food? Which will ultimately be more expensive?

Surge in biofuel production pushes up food prices
By Javier Blas and Jenny Wiggins in London

Published: July 16 2007 03:00 | Last updated: July 16 2007 03:00

A surge in the production of biofuels derived from corn, wheat and soyabeans is helping to push up food prices so sharply that the World Food Programme, the United Nations agency in charge of fighting famine, is finding it difficult to feed as many hungry people as it has in the past.

Josette Sheeran, WFP's executive director, said in an interview with the Financial Times that rising food prices were "already having an impact on WFP operations", and added: "There is a realisation we are facing a new level of challenge."

Food commodity prices are surging because of a number of factors including rising demand from China and bad weather, but the potential consequences of the rising demand for biofuels have caught the attention of those in the business of feeding the world.

Mark Spelman, head of Accenture's global energy practice, said the biofuel industry was at risk of creating a public backlash similar to wind-power generation, as food inflation continues.

"Wind power was a very popular renewable source of energy until a wind farm was planned in someone's backyard," he said.

Still, Paul O'Brien, overseas director for the humanitarian organisation Concern Worldwide, said higher food prices could benefit farmers in emerging markets if food aid programmes found it cheaper to spend cash donations in the countries they distribute food in, rather than in the US and Europe.

"What we would encourage is [food aid agencies] to look more locally . . . and for donors to give money to the WFP," Mr O'Brien said.

Some 77 per cent of the WFP's food purchases are made in developing countries.

Last year it spent $460m (鈧?34m, 拢226m) in such countries, making the largest cash purchases in Uganda, Ethiopia and Pakistan. The United Nations organisation feeds some 90m people annually.

Ms Sheeran also said that her organisation and others were trying to make it easier for poorer farmers to benefit from rising demand for food, either by helping African farmers become more efficient and tapping new markets or by helping small farmers in Latin America benefit from the rising demand for biofuels.

"In a world of growing population, the African farmer will be needed," she said.

The rise in food prices has also underlined the difficulties the WFP and other food aid programmes face when determining which type of donations they receive are more effective - cash or commodities.

About half of the donations the WFP receives are now made in cash, the rest in commodities. When the organisation started, it benefited mainly from surplus food donated by wealthy nations including the US. It now receives cash from many countries, and often, as is the case with the US, must spend that money on products grown in the donor country.

Marc Cohen, research fellow at the US's International Food Policy Research Institute, said that the rise in food prices had reawakened questions over the best way to distribute food aid.

Copyright The Financial Times Limited 2007

Food is a need and gas is a want. Therefore gas is subject to better rationing since people will self ration on gas. Electricty is where the future of fuel is and not in the nonsense of biofuel. It's a current distraction to make people think that it's the answer but the current morons in government can't begin to tie their own shoes much less solve an energy crisis. Rest assured there will be plenty of food in the future.

Look at the CPI core rate it's the CPI minus energy and food both of which are very volatile. But in the end my comment on food should sum it up.

cant live without food. we can walk if we had 2.

They are not excluyent. Food is more important but alternative fuels can be made out of any biomass, including trees. Not neccesarily corn or soybeans.

Besides, current biofuel production uses more fuel than it makes. They are not serious. Wake me when electric agricultural machinery and electric powered food distribution systems are widely used without burning natural gas to generate such electricity.

Food is a necessity, u can live w/o gas. It won't keep u alive.

FOOD,.......WE CAN LIVE, WITH OUT FUEL, BUT WE NEED FOOD TO LIVE,.....

i think we have to think not just the short run,yes food seems more important maybe but in the long run the effects can change... gas is a basic input, it is used in so much things.. and if price of gas increases its effect in long run will be very dramatic (we saw something like that in petrol crisis) and we see an inflation which depends on cost of productions. (as costs get higher and higher prices will increase) and prices wll increase so much (no matter which industry) so we have to think the long run too to answer this question