Trends on Global Food Markets: What Is the Significance of Biofuels?

Transcription

1 ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ORGANISATION DE COOPÉRATION ET DE DEVELOPMENT ÉCONOMIQUES Trends on Global Food Markets: What Is the Significance of Biofuels? Stefan Tangermann Director for Trade and Agriculture Policies against Hunger: Bioenergy and Food Security Berlin, 17 December 27

2 Explosion of global food prices Concerns about food price inflation Governments begin to act nervously Have market conditions changed fundamentally? What is the role of biofuels? What does it mean for food security in developing countries? 2

3 OECD analysis 3

4 Million tonnes Shocks in world cereal markets: changes from 25/6 to 26/ Wheat production Coarse grain production Cereal use for ethanol 4

5 Million tonnes Per cent Substantial drop in global grain stocks Wheat stocks Wheat stock-to-use Coarse grains stocks Coarse grains stock-to-use 5

6 Short term and long term factors Extreme weather conditions (cereals, milk) Some production decline in important exporting countries (Argentina: milk; EU: milk) Low stocks Growing food demand in emerging economies Higher production costs: oil price Demand for biofuels Short term Short term (?) Short term Long term Long term Long term 6

7 Per cent Where is the world s population and income growing most? 7% Annual per cent change 27 to 216 6% 5% 4% 3% 2% 1% % Africa Asia and Pacific Latin America & Caribbean Oceania North America Europe World Income Population Source: OECD 7

8 Per cent Consumption gains mainly outside OECD 3.% 2.5% Annual per cent change 27 to % 1.5% 1.%.5%.% Wheat Coarse grains Oilseeds Beef Pig Meat Cheese WMP OECD Non OECD Source: OECD 8

9 OECD Developing Food use remains an important driver in global wheat demand Food Feed Other million tonnes Source: OECD 9

10 OECD Developing while ethanol pushes coarse grain demand up Food Feed Other million tonnes Source: OECD 1

11 billion litres of ethanol million t (maize) billion litres of biofuels million t (crops) USA: Ethanol to double EU: Ethanol and biodiesel to grow Ethanol production Maize use Ethanol Wheat use Oilseeds use Biodiesel Maize use Source: OECD 11

12 Billion litres (ethanol) Million tonnes (sugar cane) Brazil: continued growth of ethanol China: ethanol to increase maize use Ethanol production Sugar cane use Source: OECD 12

13 Billions liters Global biofuel production to expand Canada Biodiesel EU Biodiesel Canada Ethanol China Ethanol EU Ethanol USA Ethanol Brazil Ethanol Source: OECD 13

14 Million tonnes Cereal requirements for ethanol production World cereal production (excl. rice) in 216: 185 mill tonnes China - maize Canada - wheat Canada - maize EU - wheat EU - maize 4 USA - maize Source: OECD

15 Per cent Feedstock requirements for bio fuels become a major new source of demand 7 6 The share of output used for biofuels (projection for 216) Sugar Brazil Maize USA Wheat EU Oilseed EU Maize Canada Maize China Source: OECD 15

16 USD/t Outlook for world prices - Crops 4 actual projected Wheat Maize Oilseeds Rice Sugar Source: OECD 16

17 USD/1kg Outlook for world prices Meat and Dairy 35 actual projected WMP Butter Beef Pigmeat Poultry Source: OECD 17

18 World price changes, 1 year periods against against % Wheat Maize Rice Veg oil Oil meals Oilseeds Sugar WMP SMP Butter Cheese Beef Pigmeat -2 18

19 Food security and biofuels Hunger, malnutrition have economic causes: income, food prices Bioefuels affect food security in developing countries through income generated in domestic biofuel production world price impact of biofuel production in OECD countries Rising world price of food benefits producers, harms consumers 19

20 'Net consumers' dominate in developing countries Poor urban consumers are negatively affected by rising food prices Many poor farmers in developing countries are net food consumers Overall, developing countries are net importers of food, in particular cereals (in 216: 143 mill tonnes, excl. rice) Africa in particular is a net importer (SSA in 216: 18 mill tonnes, excl. rice) 2

21 Country size in proportion to cereal net exports Source: SASI Group (University of Sheffield) and Mark Newman 21

22 Biofuels policies of rich countries harm food consumers in poor countries Biofuel demand in OECD countries is largely driven by policies (subsidies, tax breaks, blending requirements, ) These policies raise demand for agricultural products and world prices of food and harm food consumers OECD tariffs harm biofuels producers in developing countries 22

23 What are the benefits of OECD biofuel policies? Energy security? Fighting climate change? Improving the environment? Supporting rural development? Creating economic benefits? Superior to improving energy efficiency? 23

24 Conclusions Current hike of world food prices is in part result of production shortfalls, transitory but also reflects growth of biofuel use which is expected to accelerate largely as result of rich country policies with questionable benefits and negative impacts on food security 24