AGRICULTURE
... both the food and energy industries face significant challenges in keeping up with demand
The Role of Biofuels Biofuels’ importance to agricultural
markets has certainly increased and is set to grow further. Food as a total share of agricultural commodity use is projected to decline from over 50% in 2000 to about 47% in 2020. Feed use of cereals and coarse grains is expected to increase, while the biofuel sector is expected to account for 9% of total use by 2020. Biofuels’ share is much higher for
particular commodities. For vegetable oils, industrial use is expected to rise from 6% in 2000 to 15% in 2020. In the EU and Argentina, biofuels’
share of vegetable oil use is expected to exceed 50% and 70% by 2020 respectively. Industrial use for sugar is even more dramatic, constituting “a major demand driver” according to the FAO. The share of sugarcane used for ethanol is expected to exceed 30% worldwide and 60% in Brazil by 2020. Overall, the FAO-OECD expects global ethanol production to
rise about 70% from 2008-2010 to 150 billion liters a year by 2020. Biodiesel production is expected to expand more than 140% from 18 billion liters to 42 billion liters. Together, this equates roughly to 3.29 million b/d of fuel products supply in 2020, out of a total market of 92.91 million b/d, according to US Energy Information Administration projections. The regional impact of biofuels on refined oil product
Figure 2: Global Biodiesel Production by Feedstocks Billion Litres
10 15 20 25 30 35 40
0 5
2008- 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010
Source: FAO-OECD Agricultural Outlook 2011 60 September 2011
Jatropha Non Agricultural Feedstock
Biomass-Based Vegetable Oil
markets will be markedly different. In the United States total oil consumption rises 1.7 million b/d out to 2020, and is only partially offset by biofuel consumption (domestic production and imports) of 540,000 b/d. In OECD Europe, biofuels production rises, but overall oil consumption falls by 1.24 million b/d. In Asia and the Middle East, crude demand growth far outstrips any contribution made by biofuels.
Policy Directions The FAO-OECD says that government
policy is a key driver behind food price increases. It writes: “considering the link between the energy and agricultural markets and the food security issues, there is a need to reconsider the role of policies in biofuel production. Such policies, including mandates, subsidies or tax incentives, and tariffs not only encourage biofuel production, but also affect where it is produced.”
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