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GRFA to G20 Agriculture Ministers:
High Oil Prices = High Food Prices

For Immediate Release

May 24, 2011

TORONTO, Canada – As the G20 Agriculture Ministers meet for the first time today in Paris to discuss food security, the Global Renewable Fuels Alliance (GRFA) is urging those ministers to focus on the real driver behind rising food costs – the rising price of crude oil.

High oil prices impact global food prices in many ways. Oil price spikes can increase the cost of fertilizer, inflate the cost of packaging and raise the cost of transportation. The GRFA first highlighted the direct link between food and oil prices in March and are seeing this dangerous relationship continue today.

The following graph clearly outlines the strong correlation between the price of crude oil and the UN FAO’s Food Price Index.

Food Price Index vs. Crude Oil Price

Source: IMF – Primary Commodity Prices

“The relationship between the price of food and oil continues to be increasingly apparent – the price of oil drives the price of food,” stated Bliss Baker, spokesperson for the GRFA. “That is why it is critical that the G20’s agriculture ministers use this first time meeting to focus on the real cause of high food prices – the high price of crude oil,” added Baker.

Food vs Oil Quick Facts:

• Data going back 30 years shows that the price of oil has driven the price of food and key grains making prices directly proportional.
• When shocks to the price of oil occur, the cost of food and key grains has followed suit. When oil prices spiked in the early 1980s, corn and rice also rose to new highs. When oil shot to more than $140 per barrel in 2008, crop prices also spiked to an all-time high, driving the FAO Food Index higher as well.
• Expert studies of price fluctuations in 2008 have echoed the conclusion of the U.K. Department of Environment, Food and Rural Affairs which ascribed the cause of agricultural commodities largely to energy prices and market speculators saying, “biofuels had a relatively small contribution.”
• Only 3.5% of global grain production is used to produce renewable fuels such as ethanol. Ethanol produced from corn only uses the starch from the grain, the remaining protein, fat and minerals is used in animal feed.
• Renewable fuels help diversify the energy mix, making us less dependent on fossil fuels and, by extension, less vulnerable to energy price shocks.

 

The Global Renewable Fuels Alliance is a non-profit organization dedicated to promoting biofuel friendly policies internationally. Alliance members represent over 65% of the global biofuels production from 44 countries. Through the development of new technologies and best practices, the Alliance members are committed to producing renewable fuels with the smallest possible footprint.

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