The prices of staple foods could rocket by 15-20% over the next decade if food crops continue to be diverted into biofuel production, caramel colours giant DD Williamson has warned.
Speaking as the Confederation of the Food and Drink Industries of the EU (CIAA) called on the EC to implement measures to reduce pricing pressure on the food industry driven by the growth in biofuels, DD Williamson said: "This is a story of escalating prices and limited capacity, and it's only going to get worse as more bioethanol plants spring up.
"Grain goes into everything from high fructose corn syrup to animal feed, and prices will go up to reflect that. There will be a consumer backlash. Only then will a real debate begin."
Terry Thomas, divisional vice president at National Starch's Natural Polymers Group, Europe, added: "Biofuels are pulling from the same pool of raw materials that we source our food grade starch from, so that has impacted prices, although I hope the situation will correct itself." Their comments came as US meat processor Tyson warned that the near doubling of corn costs since last year would hit retail prices, and Heineken argued that biofuel was causing a "structural shift" in agricultural markets by driving up barley prices as farmers planted fuel crops like corn instead.
European snack trade association Caobisco, which has urged the EC to eliminate compulsory set-aside, revise the import duties system and expand the feedstock base for biofuels, said EC calls to increase the proportion of biofuel used in road transport from 0.8% to 10% by 2020 and US moves to substitute 20% of petroleum with ethanol by 2017 would lead to "a serious shortage of raw materials and a non-sustainable price increase"
Members had already experienced steep increases in raw material prices, it added. "Rapeseed oil prices have doubled over the last five years and the price of cereals, starches and glucose recently increased by 20%."
According to the UK Margarine and Spreads Association, almost double the current amount of set aside land would be required for crop production just to meet the EU target of 5.75% of transport fuels to be biofuels by 2010.
Corn prices have doubled since the start of last year to about $4 a bushel and wheat prices are at a 10-year high.
The Environmental Industries Commission said that the long-term solution to the fuel vs food debate would ultimately rely on second generation biofuels from non-food sources such as the oil-bearing tree Jatropha, wood, other organic waste, and ligno-cellulosic facilities that retro-feed residues and consequently offset their energy intakes.
However, the EC appeared to be making assumptions about the ability of these new biofuels to solve the food/fuel problem without being able to provide any assurances about their future availability, said the CIAA.€