Has anyone noticed the price of corn oil lately? Corn oil and crude oil prices now closely track each other. Corn is king in America, and in other parts of the world, rain forests are cleared to make room for more plantations of soy bean and palm oil to use as biofuels. The poor are affected the most as they cannot afford the cost increases. Is this the right solution for global warming…making clean burning ethanol and biodiesel at the expense of food sources?
The general opinion seems to suggest that biofuels are responsible for the recent and ongoing food price crisis. In fact, even some of the strongest advocates for “growing energy” through bio-ethanol have admitted this impact on corn demand and therefore price (http://www.presstv.ir/detail.aspx?id=54133§ionid=3510203).
However, I saw an interesting article earlier this month (http://www.commodityonline.com/news/topstory/newsdetails.php?id=7671) which was actually suggesting that the physical production of biofuels is not a significant factor in the current food crisis (at least so far). That perspective (asserted by analytical firm F.O. Licht) contends that it is in fact speculative buying, rather than diversion of food crops and oil seeds for biofuels, that has resulted in skyrocketing commodity prices, they go on to quote statistics in that regard.
For example in 2007, 4.5% of global grain usage and 5.9% of global vegetable oil market was used in making biofuels, implying that the rate of price increases in wheat, corn and oil seeds over the past year could be due to speculative buying and higher energy costs for agricultural production. F.O. Licht further stated that increases in prices were also due to “the often-repeated assumption that the expanding biofuels sector was boosting these markets”.