Peak Food

A recent announcement by the U.S government shows that the ethenol industry is expected to take around 87 million tonnes of maize this year which will be 27% of the crop compared with 55 mt (20%) in 2006.

There are now about 117 distilleries working with a capacity of about 6 billion gallons per year. Within two years this is expected to double.

The Center for Agricultural and Rural Development in Iowa State University has found that U.S retail prices have already increased by $14bln annually, and could climb by $20 bln annually if crude oil and maize prices remain high.

U.S ethenol production could reach 30bln gallons by 2012, consuming over half of U.S maize, wheat and coarse grains pushing up meat and poultry prices and significantly reducing grain and meat exports.

This is plainly very bad news for those countries that depend on U.S grain imports, especially as biofuel production is also causing exportable surpluses to disappear in other areas such as the EU. They must be worrying about food security. And so they should.

With such a tight situation, any major climatic problems in the world such as widespread drought or late monsoons would cause chaos in the grain markets and panic among the public