Alternative Fuels Australia

Economist issues warning on using food for fuel

Posted by Car Geek on November 28, 2007

An economist from ABN Amro has warned that the world risks running out of basic foodstock, which will further increase prices.

Michael Knox, ABN Amro’s chief economist, says that supplies such as wheat and corn are becoming more limited, in part due to the increase in production of crop-based biofuels such as ethanol. The limitation in supply can effect not only the price of basic staples such as bread, but also meat and poultry, which rely on them as a feedstock.

Grain in particular is under threat, with prices tripling over the past three years and stocks dwindling. Australia markets much of its grain overseas, but has in recent times also began using it for ethanol production at the Manildra plant near Nowra, NSW. Corn is in a similar situation, with the US rapidly increasing its ethanol production to offset the increasing price of oil. Corn ethanol has relatively fewer environmental benefits when compared to other feedstocks, however, with Mr Knox calling it “the dumbest idea that politicians have produced this century”.

Upcoming technology such as cellulosic ethanol is designed to produce environmentally friendly fuel from non-edible sources, such as switchgrass, but it may be some time before the technology is economically competitive with the established first-generation ethanol market.

(Source: Courier-Mail)

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