Private financial support for technology acceleration continues to be important, and certain technologies are becoming clear favorites for investors, according to a recent Bloomberg New Energy Finance analysis of financial investments made in biofuels projects since 2004.
According to the analysis, venture capitalists and private equity firms have provided 60 percent, or $2.7 billion, of the total private investments made in next-generation biofuels since 2004. Of those investments, biochemical conversion technologies received 66 percent of the action while thermochemical technologies received 30 percent. Sixty percent of the investments made in next-generation biofuels through public markets since 2004 have also been directed toward biochemical technologies. Additionally, the analysis noted that companies backed by a well-known strategic partner appear to receive greater interest from the public markets. The analysis noted that three of the most conspicuous public offerings in recent years have been from companies developing biochemical processes that also have prominent partners, such as oil companies or pharmaceutical firms.
Government agencies also seem to prefer biochemical pathways. Since 2004, those technologies have received the majority of dispersed federal funds, according to Bloomberg’s analysis. Enzymatic hydrolysis projects have received 30 percent of the government’s next-gen biofuels funds, followed by acid hydrolysis projects, which received 21 percent of the dispersed funds. The analysts noted in their report, however, that while the government has announced $3.1 billion in investments to the industry since 2004, less than half of that amount has actually been received by awardees. This has negatively impacted the commercialization of next-generation biofuel technologies. “The clear disparity between the ‘announcement’ and ‘disbursement’ of funds by the DOE and USDA - particularly of loan guarantees - illustrates the inefficacy of the government’s fractional payout scheme,” the analysis noted.
“Technologies are not achieving the covenants set by the lending agencies at the expected pace. Consequently, project developers do not have access to the totality of the funds committed to their projects. As a result, technological developments take longer, forcing projects to seek additional funding from the private sector, which has been near impossible during the financial recession of the past 30 months.” On a positive note, the analysts believe the USDA’s announcement earlier this year to provide $460 million through its loan guarantee program could help to alleviate the bottleneck, if it is able to disburse funds in a more timely fashion.
Bloomberg analysts attributed greater interest in biochemical conversion processes to the fact that those technologies can be proven at a smaller scale than other technologies, such as thermochemical processes. Further, the analysts found that enzymatic hydrolysis appears to be the most attractive biochemical process, likely because it provides the ability to use coproducts produced from the process to generate heat and power and appears to have greater energy input-output benefits when compared with other technologies. The analysts noted, however that international oil companies are particularly well-suited to invest in thermochemical processes. And while most oil companies are publicly traded, many corporate investment deals are not made public, so it is possible that a greater amount of financial support has been given to thermochemical pathways than is illustrated by the analysis.
Source: http://www.ethanolproducer.com/articles/7829/bloomberg-report-says-biochemical-pathway-attractive-to-investors
DGC Asset Management Limited provide Investors with the opportunity to engage in strategic mid term and long term asset-backed investments within the Agricultural, Timber and Renewable Energy sectors.
Wednesday, 8 June 2011
Australia call for governmental biofuel investment support
Industry stakeholders are calling on the Australian and New Zealand governments to provide guarantees and financial assistance this year to kick-start a local aviation biofuel industry that could be exported to the larger Australasian region.
Launching a new report into alternative fuels, The Flight Path to Sustainable Aviation, Qantas head of risk and resilience John Valastro said: "The government has said that it will back sectors that have the potential to create green jobs that help move Australia to a low-carbon economy. The report we're launching clearly shows that aviation, through the use and development of sustainable aviation fuel, has the potential to be one of those sectors."
Qantas, with Air New Zealand, Boeing and Virgin Australia - regional members of the Sustainable Aviation Fuel Users Group - helped commission and develop the report that provides a roadmap to how the region can achieve an economically and environmentally beneficial biofuel industry.
The report said that without government assistance, financial in particular, supply chains will face "technological and market uncertainties and competition from other users of biomass resources" that will not deliver the "price signals and support for initial value chain investment and expansion" necessary for airlines to purchase biofuels.
Qantas has already formed two small-scale pacts to purchase biofuel from US renewable energy companies Solazyme and Solena. However, Virgin Australia has said that it will announce its own partnership within a few months and airline representatives have said they are unlikely to be heavily involved in a local biofuel industry not supported by the government.
"None of us can solve this problem alone. Developing sustainable aviation fuel involves significant investment and research development. The solution will only be found through industry-wide initiatives and government support," said Virgin Australia corporate advisory executive Merren McArthur.
In addition to the Sustainable Aviation Fuel Users Group, the Defense Science and Technology Organisation, the Climate Group, and the Commonwealth Scientific and Industrial Research Organisation also commissioned and developed the study and report.
Source: http://www.flightglobal.com/articles/2011/06/08/357445/call-for-governmental-biofuel-support.html
Launching a new report into alternative fuels, The Flight Path to Sustainable Aviation, Qantas head of risk and resilience John Valastro said: "The government has said that it will back sectors that have the potential to create green jobs that help move Australia to a low-carbon economy. The report we're launching clearly shows that aviation, through the use and development of sustainable aviation fuel, has the potential to be one of those sectors."
Qantas, with Air New Zealand, Boeing and Virgin Australia - regional members of the Sustainable Aviation Fuel Users Group - helped commission and develop the report that provides a roadmap to how the region can achieve an economically and environmentally beneficial biofuel industry.
The report said that without government assistance, financial in particular, supply chains will face "technological and market uncertainties and competition from other users of biomass resources" that will not deliver the "price signals and support for initial value chain investment and expansion" necessary for airlines to purchase biofuels.
Qantas has already formed two small-scale pacts to purchase biofuel from US renewable energy companies Solazyme and Solena. However, Virgin Australia has said that it will announce its own partnership within a few months and airline representatives have said they are unlikely to be heavily involved in a local biofuel industry not supported by the government.
"None of us can solve this problem alone. Developing sustainable aviation fuel involves significant investment and research development. The solution will only be found through industry-wide initiatives and government support," said Virgin Australia corporate advisory executive Merren McArthur.
In addition to the Sustainable Aviation Fuel Users Group, the Defense Science and Technology Organisation, the Climate Group, and the Commonwealth Scientific and Industrial Research Organisation also commissioned and developed the study and report.
Source: http://www.flightglobal.com/articles/2011/06/08/357445/call-for-governmental-biofuel-support.html
Mozambique has 31 biofuel investment projects
Maputo, Moçambique, 8 June – Mozambique’s Centre for Agricultural Promotion (Cepagri) since 2007 has registered a total of 31 investment projects in biofuel production, covering an area of 324,000 hectares, according to the news bulletin of the Confederation of Economic Associations of Mozambique (CTA).
The text published in the latest edition of the bulletin did not mention the amount of investment in the registered projects.
In order to make the biofuel development project viable in Mozambique the government approved the Strategic Biofuel Policy in 2009.
On 29 March, the council of ministers approved the Regulation on Biofuel Mixtures, as well as establishing the Inter-ministerial Biofuel Commission, headed up by the ministries for Energy and Agriculture.
These instruments were set up to promote the domestic biofuel market, its supervision and coordination.
The government expects these regulations to establish conditions for the introduction of mixtures of 90 percent gasoline with 10 percent ethanol and 97 percent fossil diesel with 3 percent biodiesel.
Source: http://www.macauhub.com.mo/en/2011/06/08/mozambique-has-31-biofuel-investment-projects/
The text published in the latest edition of the bulletin did not mention the amount of investment in the registered projects.
In order to make the biofuel development project viable in Mozambique the government approved the Strategic Biofuel Policy in 2009.
On 29 March, the council of ministers approved the Regulation on Biofuel Mixtures, as well as establishing the Inter-ministerial Biofuel Commission, headed up by the ministries for Energy and Agriculture.
These instruments were set up to promote the domestic biofuel market, its supervision and coordination.
The government expects these regulations to establish conditions for the introduction of mixtures of 90 percent gasoline with 10 percent ethanol and 97 percent fossil diesel with 3 percent biodiesel.
Source: http://www.macauhub.com.mo/en/2011/06/08/mozambique-has-31-biofuel-investment-projects/
America's Hottest Investment: Farmland
This is usually a slow time of the year for farm sales. It's past prime planting season. Yet, Sam Kain, Des Moines area manager for land sales at Farmers National, is busy. He has 3 auctions this week. Most of the 30 or so bidders who show up will be farmers. But an increasing number of people buying land these days have no intention of planting seeds, at least not themselves. They are investors and a growing number of them are getting interested in farmland.
Just how hot is American farmland? By some accounts the value of farmland is up 20% this year alone. That's better than stocks or gold. During the past two decades, owning farmland would have produced an annual return of nearly 11%, according to Hancock Agricultural Investment Group. And that covers a time period when tech stocks boomed and crashed, and housing boomed and crashed. So at a time when investors are still looking for safety, farmland is becoming the "it" investment.
The New York Observer recently had a story saying more hedge funders have been talking farmland. Successful Canadian hedge fund manager Jean-Francois Tardiff, recently said he liked farmland. And a number of investors who gained fame for calling the housing crash, including Michael Burry and Passport Capital's John Burbank have been buying up farmland in the past two years. Famed investor Jim Rodgers, a long-time commodity bull, thinks farmland values will continue to rise.
There are good reasons to believe that is the case, and some not so good. Let's start with the good.
Crop prices are up. That's being driven in part by the emerging markets. Corn is America's number one crop. And nearly half of the corn we grow goes overseas to feed cattle and other animals. As China and the rest of Asia get wealthier they are going to eat more meat, and will therefore need more corn. What's more ethanol has had a huge impact on the price of corn as well. A higher oil price makes ethanol a more attractive substitute.
Commodities prices have been falling recently. And fears that the US economy and the world economy could be slumping again have brought down the price of oil and other commodities. But demand for food is not going away. One of sign of that is that corn after dropping sharply with the rest of the commodity market in early May has rebounded to near its yearly highs, up to about $7.50 a bushel. That's up from about $4.00 a year ago.
Then there is farm technology. Seeds are better than they used to be, requiring less water. Most tractors these days are equipped with GPS, many of which will allow farmers to map out the most and least productive areas of their land so they can better distribute seeds and fertilizer. And when I was recently out in Nebraska I saw a number of farmers just starting to experiment with double row plantin g- staggering seeds so they could fit two rows in space that is not much wider than what they used to use for one. The result is that crop yields are way up, and rising. If farmland is more productive than it was a few years ago, it should be worth more.
All of this, though – the hedge funds getting in, the 20-year track record of positive returns, emerging market riches – smells a little bubbly. Remember housing, mortgage bonds and auction rate securities were also once thought of as can't lose investments. That was until the global pool of money rushed in and inflated the housing market. That global pool of money never really went away. It just went into hibernation or maybe into oil and gold. And now it is surfacing in farmland. The concern is that this is a fear trade, which people are making to protect themselves from inflation or worse. Once the general economy rebounds, and fear abates, farmland could plummet. Remember, farmland was a great investment in the 1970s. Not so much in the 1980s or 1990s.
So is farmland overvalued now? Here's the math: In Nebraska where I was, the farmland prices have reached about $6,000 an acre. Based on the current price of fertilizer and seeds, the farmers told me, it costs about $4 to grow a bushel of corn. That means at current prices, each bushel produces a profit of $3.50. Farmers these days get about 200 bushels per acre of corn. That means a $6,000 investment produces an annual income of about $650, which is an income yield of 10.5%. That's more than double the earnings yield of the S&P 500. And it is three times the yield you would get with 10-year Treasury notes. So by that measure farmland doesn't look overvalued.
That being said, it's very hard to invest in farmland. There are no mutual funds that do it. Pension funds are getting into investing in farmland. So if you are one of the few people who have a pension, you may already be invested in agriculture in some small way. But even if you have no investment exposure to farmland, this all matters. The farm economy, while small relatively in the scheme of things, is playing a more important role in our economic growth. And as farm prices continue to go up that positive affect should remain, creating profits for farmers and jobs in Nebraska, Iowa and elsewhere. What's more, the farm economy has rebounded much faster than the rest of the economy. The unemployment rate in Nebraska is about half that of the rest of the U.S. The reason in large part has to do with our weak dollar and exports. And that says something about where the U.S. economy is headed - I think in a positive way. We have the ability to make things here, even basic things and make money doing it and create jobs. That's a bit of good news in an otherwise bad day.
Read more: http://curiouscapitalist.blogs.time.com/2011/06/01/americas-hottest-investment-farmland/#ixzz1OgUFpFDH
Source: http://curiouscapitalist.blogs.time.com/2011/06/01/americas-hottest-investment-farmland/
Just how hot is American farmland? By some accounts the value of farmland is up 20% this year alone. That's better than stocks or gold. During the past two decades, owning farmland would have produced an annual return of nearly 11%, according to Hancock Agricultural Investment Group. And that covers a time period when tech stocks boomed and crashed, and housing boomed and crashed. So at a time when investors are still looking for safety, farmland is becoming the "it" investment.
The New York Observer recently had a story saying more hedge funders have been talking farmland. Successful Canadian hedge fund manager Jean-Francois Tardiff, recently said he liked farmland. And a number of investors who gained fame for calling the housing crash, including Michael Burry and Passport Capital's John Burbank have been buying up farmland in the past two years. Famed investor Jim Rodgers, a long-time commodity bull, thinks farmland values will continue to rise.
There are good reasons to believe that is the case, and some not so good. Let's start with the good.
Crop prices are up. That's being driven in part by the emerging markets. Corn is America's number one crop. And nearly half of the corn we grow goes overseas to feed cattle and other animals. As China and the rest of Asia get wealthier they are going to eat more meat, and will therefore need more corn. What's more ethanol has had a huge impact on the price of corn as well. A higher oil price makes ethanol a more attractive substitute.
Commodities prices have been falling recently. And fears that the US economy and the world economy could be slumping again have brought down the price of oil and other commodities. But demand for food is not going away. One of sign of that is that corn after dropping sharply with the rest of the commodity market in early May has rebounded to near its yearly highs, up to about $7.50 a bushel. That's up from about $4.00 a year ago.
Then there is farm technology. Seeds are better than they used to be, requiring less water. Most tractors these days are equipped with GPS, many of which will allow farmers to map out the most and least productive areas of their land so they can better distribute seeds and fertilizer. And when I was recently out in Nebraska I saw a number of farmers just starting to experiment with double row plantin g- staggering seeds so they could fit two rows in space that is not much wider than what they used to use for one. The result is that crop yields are way up, and rising. If farmland is more productive than it was a few years ago, it should be worth more.
All of this, though – the hedge funds getting in, the 20-year track record of positive returns, emerging market riches – smells a little bubbly. Remember housing, mortgage bonds and auction rate securities were also once thought of as can't lose investments. That was until the global pool of money rushed in and inflated the housing market. That global pool of money never really went away. It just went into hibernation or maybe into oil and gold. And now it is surfacing in farmland. The concern is that this is a fear trade, which people are making to protect themselves from inflation or worse. Once the general economy rebounds, and fear abates, farmland could plummet. Remember, farmland was a great investment in the 1970s. Not so much in the 1980s or 1990s.
So is farmland overvalued now? Here's the math: In Nebraska where I was, the farmland prices have reached about $6,000 an acre. Based on the current price of fertilizer and seeds, the farmers told me, it costs about $4 to grow a bushel of corn. That means at current prices, each bushel produces a profit of $3.50. Farmers these days get about 200 bushels per acre of corn. That means a $6,000 investment produces an annual income of about $650, which is an income yield of 10.5%. That's more than double the earnings yield of the S&P 500. And it is three times the yield you would get with 10-year Treasury notes. So by that measure farmland doesn't look overvalued.
That being said, it's very hard to invest in farmland. There are no mutual funds that do it. Pension funds are getting into investing in farmland. So if you are one of the few people who have a pension, you may already be invested in agriculture in some small way. But even if you have no investment exposure to farmland, this all matters. The farm economy, while small relatively in the scheme of things, is playing a more important role in our economic growth. And as farm prices continue to go up that positive affect should remain, creating profits for farmers and jobs in Nebraska, Iowa and elsewhere. What's more, the farm economy has rebounded much faster than the rest of the economy. The unemployment rate in Nebraska is about half that of the rest of the U.S. The reason in large part has to do with our weak dollar and exports. And that says something about where the U.S. economy is headed - I think in a positive way. We have the ability to make things here, even basic things and make money doing it and create jobs. That's a bit of good news in an otherwise bad day.
Read more: http://curiouscapitalist.blogs.time.com/2011/06/01/americas-hottest-investment-farmland/#ixzz1OgUFpFDH
Source: http://curiouscapitalist.blogs.time.com/2011/06/01/americas-hottest-investment-farmland/
Foreign farmland investment in Western District Australia sparks support for tighter regulation
Independent Senator Nick Xenophon says the potential purchase of five properties in the Western District of Victoria by a Middle East agricultural company highlights the importance of tightening the laws on foreign investment
It has been reported that Qatar's Hassad Foods is set to purchase 8500 hectares of farmland in a deal worth $35 million.
Currently, the Foreign Investment Review Board only assesses purchases that exceed $230 million.
Senator Xenophon has introduced a Private Member's Bill which will require all purchases of agricultural land more than five hectares to be scrutinised by the FIRB.
"I don't know why we have such an extraordinarily high threshold here in Australia," he says.
Senator Xenophon says foreign countries are investing in Australia because they understand the importance of food security.
"It's going to become the big issue of the 21st century (and) we have been less than smart in our approach to this."
Victorian Farmers Federation President Andrew Broad agrees that tightening the regulation of foreign investment is crucial.
But he says a five hectare threshold would be too onerous to govern.
Mr Broad says investments that exceed $20 million should be investigated.
"It doesn't have to be onerous, I don't think the Foreign Investment Review Board should stop every transaction, it's just a matter of providing some oversight," he says.
"We need to be aware this is what's happening around the world and the Australia Government is going to be 10 years behind the mark and it will be too late."
Mr Broad says Australia is in a good position to increase food production capacity to meet rising global demand.
"But we are selling both the soil and chance to profit off it," he says.
"Id' rather sell them heaps and heaps of milk, heaps and heaps of wool and heaps and heaps of grain, than sell them the farm once and not be able to capitalise into perpetuity."
"There are a lot of people in Federal Government at the moment whose ears are shut to agriculture."
Senator Xenophon says the Bill is due to voted on later this year.
Soucre: http://www.abc.net.au/local/audio/2011/06/08/3238857.htm?site=ballarat
It has been reported that Qatar's Hassad Foods is set to purchase 8500 hectares of farmland in a deal worth $35 million.
Currently, the Foreign Investment Review Board only assesses purchases that exceed $230 million.
Senator Xenophon has introduced a Private Member's Bill which will require all purchases of agricultural land more than five hectares to be scrutinised by the FIRB.
"I don't know why we have such an extraordinarily high threshold here in Australia," he says.
Senator Xenophon says foreign countries are investing in Australia because they understand the importance of food security.
"It's going to become the big issue of the 21st century (and) we have been less than smart in our approach to this."
Victorian Farmers Federation President Andrew Broad agrees that tightening the regulation of foreign investment is crucial.
But he says a five hectare threshold would be too onerous to govern.
Mr Broad says investments that exceed $20 million should be investigated.
"It doesn't have to be onerous, I don't think the Foreign Investment Review Board should stop every transaction, it's just a matter of providing some oversight," he says.
"We need to be aware this is what's happening around the world and the Australia Government is going to be 10 years behind the mark and it will be too late."
Mr Broad says Australia is in a good position to increase food production capacity to meet rising global demand.
"But we are selling both the soil and chance to profit off it," he says.
"Id' rather sell them heaps and heaps of milk, heaps and heaps of wool and heaps and heaps of grain, than sell them the farm once and not be able to capitalise into perpetuity."
"There are a lot of people in Federal Government at the moment whose ears are shut to agriculture."
Senator Xenophon says the Bill is due to voted on later this year.
Soucre: http://www.abc.net.au/local/audio/2011/06/08/3238857.htm?site=ballarat
Saudi prince signs new Egypt farm land
Egypt settled one of a string of disputes over state land sales under deposed President Hosni Mubarak, revising the terms of a farmland deal with Saudi Prince Alwaleed bin Talal, the Egyptian government said on Tuesday.
The Saudi billionaire signed a new contract with the Egyptian government for land allocated to his Kingdom Agricultural Development Holding (KADCO), the cabinet said.
Land sale scandals have torn through Egypt's once booming housing sector and gathered pace after Mubarak's overthrow in a popular uprising.
Courts have scrapped land contracts for Egypt's two largest property developers, Talaat Moustafa Group and Palm Hills and two former government ministers have been sentenced to jail over graft in state land sales.
KADCO, part of Alwaleed's Kingdom Holding Co bought 100,000 feddans (420 million square meters) at Toshka in southern Egypt in 1998 as part of a project to irrigate reclaimed agricultural land near the Sudanese border.
Egypt's public prosecutor said in April that the sale violated the law and the Saudi company later agreed to give back 75,000 feddans, according to Egypt's government.
The new deal stipulates that the company will own 10,000 feddans while cultivating another 15,000 feddans that it would take ownership of at a later date, a government spokesman said in April.
Egyptian Prime Minister Essam Sharaf described the new deal as a sign the government intended to correct "mistakes" in investment and trade deals signed by previous governments, a cabinet statement said on Tuesday.
"This deal signing ... reflects the government's approach to encouraging Arab and foreign investments through amicable negotiation to reach satisfactory solutions for both parties that agree with the law," Mr. Sharaf said.
The government has said it was setting up a committee to settle problems surrounding investment contracts.
Source: http://english.alarabiya.net/articles/2011/06/08/152401.html
The Saudi billionaire signed a new contract with the Egyptian government for land allocated to his Kingdom Agricultural Development Holding (KADCO), the cabinet said.
Land sale scandals have torn through Egypt's once booming housing sector and gathered pace after Mubarak's overthrow in a popular uprising.
Courts have scrapped land contracts for Egypt's two largest property developers, Talaat Moustafa Group and Palm Hills and two former government ministers have been sentenced to jail over graft in state land sales.
KADCO, part of Alwaleed's Kingdom Holding Co bought 100,000 feddans (420 million square meters) at Toshka in southern Egypt in 1998 as part of a project to irrigate reclaimed agricultural land near the Sudanese border.
Egypt's public prosecutor said in April that the sale violated the law and the Saudi company later agreed to give back 75,000 feddans, according to Egypt's government.
The new deal stipulates that the company will own 10,000 feddans while cultivating another 15,000 feddans that it would take ownership of at a later date, a government spokesman said in April.
Egyptian Prime Minister Essam Sharaf described the new deal as a sign the government intended to correct "mistakes" in investment and trade deals signed by previous governments, a cabinet statement said on Tuesday.
"This deal signing ... reflects the government's approach to encouraging Arab and foreign investments through amicable negotiation to reach satisfactory solutions for both parties that agree with the law," Mr. Sharaf said.
The government has said it was setting up a committee to settle problems surrounding investment contracts.
Source: http://english.alarabiya.net/articles/2011/06/08/152401.html
OECD’s Gurria Says Food Production Needs ‘Big’ Investment Boost
OECD Secretary General Jose Angel Gurria said boosting food stockpiles in emerging and developing nations will require increased government and private spending.
“Most of the potential to increase production is outside the OECD countries,” Gurria, head of the Paris-based Organization for Economic Cooperation and Development, said today at a conference in Montreal. “That is where there is land available and where the gap between the current and the potential yields is enormous. But a big increase in investment is needed there.”
The cost of food is projected to remain elevated into 2012. Global wheat production will lag behind demand, helping to keep food prices high and volatile at least through next year, the United Nations Food and Agriculture Organization said today on its website.
Gurria offered two possible solutions to prevent future surges in food costs. “Governments could roll back the measures which mandate and subsidize biofuel consumption and production, which have created conflicts between fuel and food,” he said. “Governments could also refrain from beggar-thy-neighbor policies such as import and export restrictions.”
Prices for staple foods including corn will more than double in two decades unless action is taken, Oxfam International said last week. World grain stocks will fall for a second year by the end of June 2012, the International Grains Council said May 26.
The increase in food prices is “not exclusively an agricultural issue,” Gurria said. “Macroeconomic factors, energy policy, the financial and economic crises, the weather, they have all contributed.”
When asked at a news conference today if the U.S. Federal Reserve’s $600 billion Treasury-purchase program, scheduled to expire at the end of the month, contributed to the recent rise in commodity prices, Gurria said, “Frankly, I don’t see a very direct link.”
The OECD, comprised mostly of developed nations in Europe and North America, has 34 member states.
Source: http://www.bloomberg.com/news/2011-06-07/oecd-s-gurria-says-food-production-needs-big-investment-boost.html
“Most of the potential to increase production is outside the OECD countries,” Gurria, head of the Paris-based Organization for Economic Cooperation and Development, said today at a conference in Montreal. “That is where there is land available and where the gap between the current and the potential yields is enormous. But a big increase in investment is needed there.”
The cost of food is projected to remain elevated into 2012. Global wheat production will lag behind demand, helping to keep food prices high and volatile at least through next year, the United Nations Food and Agriculture Organization said today on its website.
Gurria offered two possible solutions to prevent future surges in food costs. “Governments could roll back the measures which mandate and subsidize biofuel consumption and production, which have created conflicts between fuel and food,” he said. “Governments could also refrain from beggar-thy-neighbor policies such as import and export restrictions.”
Prices for staple foods including corn will more than double in two decades unless action is taken, Oxfam International said last week. World grain stocks will fall for a second year by the end of June 2012, the International Grains Council said May 26.
The increase in food prices is “not exclusively an agricultural issue,” Gurria said. “Macroeconomic factors, energy policy, the financial and economic crises, the weather, they have all contributed.”
When asked at a news conference today if the U.S. Federal Reserve’s $600 billion Treasury-purchase program, scheduled to expire at the end of the month, contributed to the recent rise in commodity prices, Gurria said, “Frankly, I don’t see a very direct link.”
The OECD, comprised mostly of developed nations in Europe and North America, has 34 member states.
Source: http://www.bloomberg.com/news/2011-06-07/oecd-s-gurria-says-food-production-needs-big-investment-boost.html
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