Fuel for thought

The drought and harsh winter have led to significant price rises in fruit and vegetables but these are short-term compared to the impact some global forces could have at the farm gate.

When visiting food industry figure Guillaume Bastiaens told a gathering of his Australian counterparts in Sydney that he had never seen anything like it in his 39 years in the game, he wasn’t referring to the quality of the city’s restaurants or produce.

The vice-chairman of US company Cargill was talking about the global impact of biofuels on agriculture and food prices.


His firm, with 149,000 employees in 64 countries including Australia, is involved in agricultural management services, buying, processing and distributing grain, livestock feed and ingredients for processed foods.

His comments are in the light of America’s booming biofuel production, prompted by President George W. Bush who is determined to reduce his nation’s reliance on oil from the Middle East.

Ethanol plants are mushrooming across the Midwest grain belt and, to satisfy their demand, US farmers are planting millions of extra hectares of corn to harvest a record crop.

So much land is now growing corn and so much of that corn is going into ethanol that global prices of other crops, such as wheat, are being forced up as the world scrambles to find supplies of grains formerly grown on the land. It has a knock-on effect with a rise in the price of foods that rely on grain. It includes beef, dairy and eggs. At the same time, millions of newly affluent people across Asia are developing the taste for the same foods, further driving demand.

Sydney Morning Herald