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THE IMPACT ON THE FOOD CHAIN OF USING CROPS FOR NON-FOOD PRODUCTS April 2013 GRAHAM REDMAN
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THE IMPACT ON THE FOOD CHAIN OF USING CROPS FOR
NON-FOOD PRODUCTS
April 2013
GRAHAM REDMAN
WHICH STONE IS KEY?Each stone represents a buyer, the bridge is the price
HOW ARE OILS PRICED?A
ug-
2005
Au
g-20
06
Au
g-20
07
Au
g-20
08
Au
g-20
09
Au
g-20
10
Au
g-20
11
Au
g-20
12
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Relative OSR Relative Brent
Pro
rtio
nal
Ch
ange
EU OSR and Crude Oil Price Relationship
Source: HGCA / Andersons
Biofuels Reduce Price Volatility
1 2 3 4 5 60%
20%
40%
60%
80%
100%
120%
Normal Consumption
Food Consumption
Biofuel Manufacture
Price (corollary is wealth)
Con
sum
ptio
n as
% o
f 'n
eed'
Engels Curve on Agri-Commodities
Biofuel Production (‘000 Barrels/Day)
2007 2008 2009 2010 20110
200
400
600
800
1000
1200
1400
1600
1800
2000
Asia & Oceania
Africa
Middle East
Eurasia
Europe
Central & South America
North America
World
How do Biofuels affect Prices?
• Increased demand for maize (or wheat) increases the price of other land based commodities
• It does not make vegetables (or other land based goods) comparatively cheaper, but does make fuel cheaper (theoretically)- This demonstrates that agricultural inputs (e.g. land)
are restricted
• Biofuels now a maturing industry
• Now we know how to produce 140 million tonnes more grain than we eat
FUTURE OF RENEWABLES?
• John Hayes, New Energy Minister - wind power sceptic
• Owen Paterson, Environment Secretary - renewables sceptic
• Energy Bill, reducing Renewables funds
• EU Biofuels; proposals to remove support beyond 2020- set in stone to 2020; no guarantees beyond then
- note how Energy Crop Scheme subsidy removed
• US biofuel subsidies being cut, even taxes possible- US biodiesel tax credits reinstated for 2013
• Even UKIP hates renewables
UK COSTS OF PRODUCTION
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0
20
40
60
80
100
120
140
160
180
Gen' O'heads Contract Mach' Costs Mach' Dep'n Total Labour
Spray Fertiliser Seed Ave' Spot Wheat Px
£/T
onn
e
Nix Pocketbook costs of Producing Feed Wheat
8.0
t/H
a
T/Ha 8.3 7.9 8.0 7.7 6.7 6.7
NABIM WHEAT GROUPS
2005 2006 2007 2008 2009 2010 2011 2012 20130
10
20
30
40
50
60
70
80
90
100
1234Other
Per
Cen
t
WHO’S THE BIGGEST?19
6019
6419
6819
7219
7619
8019
8419
8819
9219
9620
0020
0420
0820
12
100
200
300
400
500
China
US
EU
Mil
lion
Ton
nes
All Grain Production by Major Region
All Grain Exports by Major Producing Region
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
2004
2008
2012
20
70
120
Mil
lion
Ton
nes
Source: USDA / Andersons
UK WHEAT TRADE19
9119
9319
9519
9719
9920
0120
0320
0520
0720
0920
1120
13
0
1
2
3
4
5
Imports
Exports
Mil
lion
Ton
nes
UK Becomes a Net Wheat Importer by Processing More
Source: HGCA / Andersons
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
4
5
6
7
8
Human & Industrial
Animal Feed
MIl
lion
ton
nes
GRAINS AS COMMODITIESU.S. Corn Use for Feedgrain & Fuel Ethanol
Source: Earth Policy Institute / Andersons
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
0
20
40
60
80
100
120
140
160
180
Fuel Ethanol Use Feedgrain Use
