What are the impacts of biofuel policies on international markets and trade?
During the 40 years up to 2002 food prices generally declined – taking into account inflation –but in recent years the prices of agricultural products have risen sharply. By early 2008 they were 64%above the levels of 2002, with vegetable oil and cereal prices showing the biggest increases, followed by dairy products and rice. However, those prices remained well below the levels reached in the 1970s and early 1980s once adjusted for inflation. The following factors are contributing to the increase in prices: • Rapid economic and population growth in many emerging countries which have led to an increased demand for agricultural products. • Increased use of food crops for the production of biofuels, with twice as much wheat and coarse grain used for ethanol in 2007 compared to 2005. Most of this growth in demand for grain occurred in the USA. • Depreciation of the US dollar compared to many other currencies. • Poor cereal harvests in major exporting countries in 2005 and 2006 and decline
