Competition between Food and Fuel Production
The emergence of biofuel production from agricultural biomass has raised concerns that biofuel production will compete with food production and result in a reduction in food supply and higher food prices. The increases in food prices in 2007-08, coinciding with the increased production of biofuels, exacerbated this perception. This increase in food prices was associated with a tightening of supply, but it was driven by many factors including increases in demand with some hoarding of food, short-term seasonal production problems and probably also economic factors such as changes in exchange rates. Oil prices also peaked in this period, increasing the costs of food production and distribution. Defining the contribution of biofuels is difficult. However, it is likely that the new end use of biofuels may result in a higher value being placed on agricultural commodities generally and this may have a long-term impact. The magnitude of these effects remains controversial with estimates of the level of impact of biofuel production on food prices varying widely. Food prices declined generally in 2008-09 together with oil prices.