‘Biofuel target will not strain food markets too heavily’

THE 10% target that the EU has set for biofuel use in its transport usage by 2020 can be met without putting a huge strain on its food markets.

Agriculture and Rural Development Commissioner Mariann Fischer Boel gave the assurance in an address to the European Grain and Oilseed Convention in Brussels.

She said analysis by the European Commission indicates that, with this target, prices for agricultural raw materials in the EU would increase by 3% to 6% for cereals, and between 5% to 18% for the major oilseeds.

Ms Fischer Boel said prices for those raw products influence food prices only to a limited extent.

The cost of cereals makes up only 1%-5% of the consumer price of bread, which means bread prices would rise by less than 1%. With regard to oilseed-based products, the rise in vegetable oil prices would be greater.

However, food-manufacturers using vegetable oils can partly replace rapeseed oil with soyabean or sunflower oil.

Ms Fischer Boel said, however, the higher the level of processing in foods the lower the share of the cost of vegetable oils in the consumer price.

Therefore, in highly processed foods such as prepared meals and chocolate bars, consumer prices would remain stable.

“Our estimates also indicate that, under current agricultural and trade policies, a proportion of our biofuel supply (between 10% and 30%) would be imported in 2020.

“The level of imports depends essentially on the competitiveness of European production of feedstock. We could boost this competitiveness by modifying the cereals intervention system. There will also be a big lift for feedstock competitiveness if second-generation biofuels, based on feedstocks such as straw, become more cost-effective by 2015, as many experts predict,” she said.