Unless governments invest to improve farm productivity "so that we can cope with the increased demand for biofuels, the (food) prices may come up between 40 and 80 percent on top of what you can see," he told reporters on the sidelines of an agriculture and poverty conference here.

"If it's well managed and we have more investment in research and technology to bring up yield levels in the crops and improve the efficiency of biofuels, these price effects may only be between five and 15 percent. So it depends on government policy," he added.

Von Braun said that "globally, many countries have plans to scale up biofuel production in the order of covering 10-20 percent of their transport fuel," chiefly ethanol and biodiesel.

Brazil has committed to 25 percent while Europe plans to use biofuels for 10 percent of the countries' needs by 2020, he added.

In Asia, he said the picture was mixed, which China having announced plans to shut down some of its ethanol plants "because of the concern for using too much grain for them."

On the other hand, India has moved rapidly into ethanol production, Japan wants to import more biomass to address its international commitments on dealing with climate change, and Malaysia and Indonesia both wanting to be major suppliers of biodiesels based on palm oil.

"So there is a general idea that this is an important market. It will be partly driven not only from the energy market side but from the global demand for renewable energy."

He said crops which are "fundamenetal for the livestock industry are being affected and clearly we will see a lot of correlation in the price movement in the energy market and in the food market."

related report

Chavez warns of biofuel disaster
Miami (UPI) Aug 09 - Venezuelan President Hugo Chavez has warned that the use of agricultural products for biofuels could lead to "disaster," the latest salvo in an ongoing dispute over increased production of the fossil fuel alternative.

Chavez said in a national address this week that increased biofuel production in Latin America -- as was proposed by the United States earlier this summer -- would not help the region's poor or bring electricity to rural communities. Instead, crops like corn meant for food production will be diverted to create more biofuels so that "illogical, absurd and stupid capitalism can continue its voracious growth," the Venezuelan leader said.

"That would be a disaster," he said.

Petroleum-rich Venezuela has increased its criticism of alternative fuel projects ever since U.S. Secretary of State Condoleezza Rice announced in June a plan to increase biofuel production in the region.

During the Organization of American States General Assembly in Panama, Rice provided an outline of four pilot projects for increasing alternative energy use and production in the region. Four nations, the Dominican Republic, El Salvador, Haiti and St. Kitts, will be the first beneficiaries of the recently signed U.S.-Brazil alternative-energy agreement that aims to increase ethanol production in the region and promote other forms of biofuels.

"This declaration realizes that biofuels will be critical to diversifying the use of our energy in our hemisphere," Rice said. "We seek to promote the democratization of energy in the Americas, increasing the number of energy suppliers, expanding the market and reducing supply disruption."

The new biofuel agenda could put "unwarranted strains" on other industries, a leading fossil fuel proponent testified during a congressional hearing last week.

"Creating artificial demand for biofuels also places unwarranted strain on other industries that compete for the same feedstocks, thus impacting food and other commodity prices," said the National Petrochemical and Refiners Association Executive Vice President Charles Drevna before the Senate Subcommittee on Energy.

Drevna's concerns about the newfound obsession with expanding the production of alternative fuels like ethanol has also found footing in countries like Mexico, where corn producers complain that corn-based ethanol production has help drive up the prices of tortillas, a staple food of the country.

Leaders in Cuba have also criticized the expansion of ethanol production in Latin America and the Caribbean, claiming it would deplete food supplies in the region, where a scarcity of sustenance is not uncommon.

Hoping to counter the growing tide of anti-biofuel sentiment, Brazil -- the No. 1 producer of sugar-based ethanol -- has joined the United States in its advocacy of increasing ethanol use and production in Latin America. Brazilian President Luiz Inacio Lula da Silva took umbrage with recent remarks that increasing the country's ethanol production would further harm the Amazon rainforest.

"We have adversaries that will make up any kind of slander against the quality of ethanol and biodiesel," he said during a visit to Brussels for a biodiesel conference.

He noted that as far back as the early Portuguese settlers, Brazilians knew the Amazon was not a suitable environment for growing sugarcane, and increasing production to meet regional and worldwide demand for ethanol would not hasten the deforestation of the Amazon.

Brazil can triple its production in the coming years "without knocking down a single tree," Brazilian Agriculture Minister Luis Carlos Guedes Pinto said in December.

Of course Venezuela, with its bountiful oil reserves and cast of regional and global customers, would have the most to lose by increasing biofuel production close to home.

Last week Chavez announced that Venezuela's oil and gas sector increased government revenue by $5.8 billion a year since 2004. But those figures, according to some Venezuelan oil officials, are inflated by the wide-sweeping nationalization of the sector ordered by Chavez.

Luis Vierma, exploration and production vice president of Venezuelan state-run oil firm PDVSA, said his country's oil industry faces a "significant operational emergency" if it does not increase the number of rigs operating in the country. PDVSA fell short of its 2007 goal of getting 191 rigs online in 2007 and producing some 3.3 million barrels per day, he added. So far, he said, 112 rigs were online as of July, and by the end of the year their numbers would only likely increase to 120.

At the same time, Venezuela's oil output is believed to have slipped by more than 250,000 barrels per day from a year ago, according to the Paris-based International Energy Agency. Production has reportedly decreased from 2.6 million bpd to 2.37 million bpd.

Another competitor on the fuel market could spell trouble for years to come for the Venezuelan petroleum sector.

Related Links
International Food Policy Research Institute
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