ECONOMY

Biofuels will have big effect on European agriculture

WESTON-SUPER-MARE, England – A sharp rise in the use of food crops to produce biofuels will have a big impact on European agricultural markets, John Townend of Arkady Feed UK Ltd said yesterday. Townend said increased use of rapeseed oil to make biodiesel, for example, would leave abundant supplies of rapeseed meal, which could cut use of US and South American soymeal in Europe. «All this extra by-product will have to find a home. It will reduce EU demand for soymeal from the Americas,» he said at a conference organized by the Renewable Energy Association. Arkady Feed is a unit of Toepfer International, which is 80 percent-owned by American agribusiness giant Archer Daniels Midland. Townend said increased use of crops such as wheat to produce ethanol had the potential to reduce the European Union’s grain surplus and so substantially reduce the trading bloc’s influence in world grain markets. «Price leadership could switch to energy,» he said, indicating demand for energy rather than food could in future be the key factor in the pricing of some crops. Biofuels, which can be made from crops such as grains, oilseeds and sugar, are seen as substitutes for fossil fuels and as a way to reduce the emission of greenhouse gases believed to contribute to global warming. Many countries have been seeking to rapidly expand their use and Britain has set a goal that 5 percent of all motor fuel sold must come from renewable sources by 2010. That target, set in November 2005, requires a 20-fold increase in biofuels use. Peter Kendall, president of Britain’s National Farmers’ Union, played down the potential impact on agricultural prices of biofuels use. He said the price for the rapeseed he produced at his farm in eastern England was now half what he was paid when he first started growing the crop several years ago. He also noted that energy could also be produced from many farm by-products such as waste straw and effluents. Kendall told the conference that the industry in Britain needed clearer long-term planning from the government if it was to catch up with other European countries such as Germany. «What we must have is a long-term vision,» he said, noting that Britain had set a target for 2010, while Germany had set goals out as far as 2027.