Biofuel impact on farm prices overplayed

Source: Reuters

By Sybille de La Hamaide

January 14, 2008

PARIS (Reuters) - The recent price rally in farm commodities such as grains, oilseeds and sugar beet can be attributed partly to higher biofuel demand but their share of the blame has been exaggerated, a top official of the Organisation for Economic Cooperation and Development (OECD).

Loek Boonekamp, a division head in the Agro-food Trade and Markets Division at the Paris-based OECD, said the surge in farm product prices -- with cereals more than doubling last year -- would have happened even without the rise in biofuel production.

"Closing your eyes and blaming the current high prices to biofuels is just too simplistic," he told the Reuters Global Agriculture and Biofuel Summit. Boonekamp said a sharp drop in supply mainly due to adverse weather conditions in top producing countries such as Australia, tight stocks worldwide and higher demand for food in developing countries were playing the biggest role in the rally.

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