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August

A World Bank report confirms the slight influence of biofuels on the rise of food commodity prices

August 26, 2010

Madrid, August 26, 2010.- The World Bank Development Prospects Group has published a report which shows the small influence of biofuels on the rise of food commodity prices. The study “Placing the 2006/08 Commodity Price Boom into Perspective (July 2010)”, has been drawn up by John Baffes, from the World Bank, and Tassos Haniotis, from the European Commission.

The report analyzes the possible causes of the notable increase of commodity prices between 2006 and 2008, and concludes that the spike in prices of food products was mainly due to the increase of the prices of energy, and to the speculation of the commodities.

It also shows that there is a direct relationship between the price of oil and that of fertilizers and the final price of the food products; and therefore, during these years, the high prices reached by oil caused marked rises in food commodity prices.

Additionally, the use of these commodities by financial investors, and the subsequent speculation by these same investors, played an important role in the escalation of prices in 2008.

Thus, it concludes that the effect of the biofuel production on food commodity prices was less than that originally predicted, a logical conclusion, furthermore, of the low consumption that they represent for these purposes against the total, approximately only 1.5 percent of the cultivated crop.

With this report, the information included in a 2008 World Bank report has been refuted. In that report, which was not published but was leaked externally, a rise of 75 percent of the prices of commodities was erroneously attributed to biofuels.

This study joins a list, which is constantly becoming longer and more precise, of thorough reports which refute the negative accusations aimed at the biofuel sector.

The original report can be found here.

Abengoa Bioenergía is one of the main bioethanol producers in the world, with a joint capacity of more than 1,500 million liters installed in the United States, Europe and Brazil. It currently operates ten bioethanol, sugar, and electricity production plants. Furthermore, Abengoa Bioenergía is one of the leading companies in the world in developing production technologies for bioethanol from ligno-cellulosic biomass. www.abengoabioenergy.com

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