China's policy not to use basic food crops, especially corn, to
make biofuel as a substitute for petroleum is a "sound decision", a
Food and Agriculture Organization (FAO) official said
yesterday.
"Such a decision by such an important world player as China is
likely to accelerate the second-generation technology for
production of ethanol fuel from non-food crops - through conversion
of biomass," said Abdolreza Abbassian, Commodity Analyst and
Secretary of FAO's Intergovernmental Group for Grains.
The UN food body official's remarks came shortly after China
imposed a moratorium on projects making ethanol fuel from corn and
other basic food crops. The importance of corn in China's food
economy has prompted the government to ask companies to switch to
non-basic food products such as cassava, sweet potato and cellulose
to make ethanol fuel.
"Food-based ethanol fuel will not be the direction for China,"
said Xu Dingming, vice-director of the Office of the National
Energy Leading Group, at a seminar on China's ethanol fuel
development in Beijing on Saturday.
China is promoting ethanol fuel to reduce its reliance on
imported oil. But it worries that the rising demand for raw
materials for ethanol could push up food prices and reduce the area
of farmland growing food crops.
Despite a bumper crop in China last year, corn prices have risen
almost 30 percent over the past nine months on the Dalian
Commodities Exchange. The increase in corn prices in turn pushed up
the costs of fodder and meat, particularly pork.
The global supply and demand situation for cereals in 2007-08 is
expected to remain tight and prices will be high, Abbassian
said.
"As long as petroleum prices remain as high as they are, and
without any major technological breakthrough in conversion of
biomass, this trend is likely to continue for some years to come,"
he said.
While forecasts say cereal production across the world is likely
to recover and then climb to a record, world demand for cereals is
also forecast to rise sharply, Abbassian said. "This strong demand
is partly driven by a rapid increase in the use of corn for making
ethanol fuel, most of which is in the US."
In five years from now, almost a third of the US corn crop will
be used to make ethanol fuel to meet the Energy Department's target
of 11.2 billion gallons by 2012, a report released by the
USGovernment Accountability Office warned last week.
"Using more corn to produce fuel is likely to push up corn
prices further, potentially influencing livestock feed markets and
meat prices," the report said.
The US is the world's largest producer, consumer and exporter of
corn. For this reason, the US' corn export prices are considered
the world's best price indicator for coarse grains in general and
for corn in particular.
According to the US Department of Agriculture, about 86 million
tons of corns could be used to make ethanol fuel between 2007 and
2008.
"The volume of domestic corn destined for ethanol will exceed
the total corn exports from the US," Abbassian said.
The increase in the use of corn to make ethanol fuel is among
the leading factors that have pushed up its price in the
international market, he said.
Since the US uses more of its domestic corn to make ethanol
fuel, the food and export sectors are left to shoulder the burden
of high prices, Abbassian said.
(China Daily June 22, 2007)