21 August 2007Independent OnlineTony Carnie
Growing world demand for "environmentally friendly" biofuels is partly to blame for the rocketing price of food in South Africa, analysts at the National Agricultural Marketing Council have warned.
Last week, the council reported that national average food prices had risen almost 14 percent over the past year and that demand for biofuels in rich nations was one of the contributors to higher domestic prices for a wide range of products, from maize to beef, milk and chickens.Price increases for different foods varied considerably. For example, cheddar cheese prices rose 39 percent between July 2006 and July 2007. Over the same period, fresh milk prices rose 26 percent, maize meal by about 21 percent, pork chops by 46 percent, fresh whole chickens by 24 percent and cooking oil by 32 percent.
Elaborating on the council's latest press release on domestic food price inflation, senior council researcher Andre Jooste said on Monday that it was not possible to quantify the exact percentage food price increases driven directly by biofuel production.However, Jooste said the predicted bumper maize harvests in the United States were unlikely to translate into lower world prices as much of this maize surplus would be diverted to the petrol tanks of US motorists.Biofuels are plant-based liquid fuels touted as beneficial to the environment since they are a renewable product which reduce pollution from the oil and petroleum industry, and potentially reduce the overall quantities of greenhouse gases which drive global warming.But since biofuel crops reduce the area of land used for food production, there is also concern in many parts of the world that the new industry will threaten food security if crops are grown to feed cars instead of people.In Mexico, for example, the cost of staple foods such as tortillas has risen sharply this year because of maize price hikes, leading to protests in several Mexican cities.The council said last week that rising oil prices and the growth of the biofuel industry were two of the main culprits driving rising world food prices.This trend was directly noticeable in the prices of maize and soy beans in South Africa, but there were also indirect spin-offs driving the price of meat, dairy and poultry products which partly rely on plant-based feed supplements."Through various trade agreements, such as the World Trade Organisation Agreement on Agriculture, South Africa's domestic markets are closely tied to global food markets. Therefore, the observed upward trend in global cereal grains, meat and dairy products have important implications for the SA domestic food market."The council noted that South Africa was also preparing to announce its own national biofuels strategy soon, and this could also influence food prices in the long term.Jooste confirmed that the council had made a submission to the government on the issue of biofuels, although the council's input was not focused on the issue of food security.However, a study on biofuels by Britain's Overseas Development Institute recommends that all nations need to set up early warning systems for food security by tracking the relationship between biofuels and staple food prices.The study noted, however, that the price impacts were complex and needed to be studied country by country.
This article was originally published on page 6 of The Mercury on August 21, 2007
