Biofuel demand creates chain reaction

Food companies such as Unilever, Nestle and Cadbury could face higher commodity costs over the long term as rising demand for biofuels pushes up prices for raw materials such as wheat, corn and sugar, according to a report by Goldman Sachs.

The development of bio-fuels – fuels produced from renewable organic sources such as corn and sugar crops – is starting to accelerate more rapidly as governments seek alternatives to more expensive oil-based energy sources.
Goldman estimates that more than 60 per cent of arable land in the European Union would be needed to meet the demands of the biofuel industry if the region was to replace 20 per cent of the fossil fuels used in transport with biofuels.

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