The growing importance of biofuels is a major challenge and an opportunity for the sector. Biofuels production has grown from 1 million hectares seven years ago to 25 million hectares today. If petroleum prices remain high and more ethanol plants are built, demand for sugar and maize will increase, leading to higher prices of these crops unless technology can lower crop production costs per tonne. Even if petroleum prices fall, the demand for corn from ethanol plants may remain high, as these plants have already incurred the fixed costs of construction and will continue to operate as long as they can cover their marginal costs of production. The problem is exacerbated by large subsidies and tax credits in the United States and other developed countries. If this additional demand for corn and sugar is met by farmers shifting land from other crops, then prices of other foods will also increase.
The first part of the publication examines hunger and poverty in the region, changes in dietary patterns, agricultural commodity trends, and the outlook for the future, including the major challenges that need to be addressed.
The second part provides a special focus on the new “gold rush”: biofuels development in Asia and the Pacific. As biofuels are likely to have a major influence on agricultural commodity prices and rural incomes for some time to come, the status of biofuels development in the region is assessed. The main focus of the analysis is on the potential effects of the demand for biofuels on regional household food security.

By: Food and Agriculture Organization of the United Nations (FAO)

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