Battle for biofuels drives world food prices higher

27 May 2007The GuardianHeather Stewart

America's thirst for environmentally friendly biofuels is driving up food prices around the world as farmers scramble to devote more land to corn, writes Heather Stewart.

With the oil price back above $70 a barrel, biofuel looks increasingly attractive, and as more corn is grown to fill fuel tanks, the prices of other food crops are also being pushed up.

'The biggest impetus right now is the fact that the oil price is very high, and ethanol is very viable,' said Kona Haque, senior commodities editor at the Economist Intelligence Unit. 'It's a land issue: it's a competition for acreage. Countries are devoting an increasing amount of their land to fuel.' Even meat prices have been affected, as there is less land available to grow soybeans to feed livestock.

Almost a quarter of this year's US corn crop is expected to be turned into fuel. Drought in Australia has added to the food prices spike, which is feeding through to world inflation.