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Fuel for Thought

22/08/2008 (source: Anna Donaldson, Beacon PR)

It's good news for land owners as the argument for land usage grows ever stronger, pushing its land value to an all time high.

Today, there are two definitive groups of land buyers in world commodity markets: one representing food and one representing biofuel. As farmers can't produce any more land, the competition between food and fuel producers is fierce. Their decision ultimately comes down to the demands of the consumer and which commodity (food or fuel) will achieve the higher price.

Historically, the UK land farmers, along with the rest of the world, produced food, feed and fibre for consumption. But now there is an increasing amount of farmers who are ditching their past and turning their attention to bio fuel production. As Lester Brown stated in his 2006 paper ‘since nearly everything we eat can be converted into automotive fuel, the high price of oil is becoming the support price for farm products.’ 1

Latest figures from the world bank reported recently in the national press suggest the price of food has risen by 75% since the ‘demand for ‘environmentally friendly’ plant-based biofuel has led to a slump in global food production and has sent grocery bills soaring’ 2.

So what is biofuel?

Bio Fuels can be identified in different categories:

Oil producing: the most obvious is oil seed rape and olives, but there are many other less obvious plants as well. Given the current cost of oil there is a clear reason why the production of oil producing crops has seen a huge increase.

Ethanol producing: sugar beat, sugar cane and other sugar based plants that can be fermented to provide alcohol based fuels for mixing with natural refined oils to eek out petrol products.

Plants grown for burning: trees are a classic example, but there are more scientific varieties of grasses such as miscanthus (elephant grass) that can be refined into pellets for burning in power stations. Even corn based produce can be burnt as it contains a significant amount of energy.

Clearly there are moral grounds about whether food should be used as fuel. As Colin Roche writes for the Independent: ‘both the recent Summit on Food in Rome and the G8, felt it necessary to address biofuels concerns. All this has yet, however, to stop the biofuel juggernaut’.3 But there is still a strong argument for environmental issues discussed by Lester R Brown such as Biofuels having ‘a domestic economic appeal, in part because locally produced fuel creates jobs and keeps money within the country’ 4.

The question about whether land should be used to provide food or fuel will continue to be a passionate world issue. The opportunity cost is clear to see, but so is the opportunity for anyone who owns land, and the land value prices continue to climb just like the price of oil.

1Adapted from "Plan B 2.0: Rescuing a Planet Under Stress and a Civilization in Trouble" by Lester R. Brown, published in 2006 by WW Norton and Company.

2Daily Telegraph 4th July 2008, Daily Mail 5th July 2008

3Colin Roche, Independent, 7th August 2008

4Adapted from "Plan B 2.0: Rescuing a Planet Under Stress and a Civilization in Trouble" by Lester R. Brown, published in 2006 by WW Norton and Company.

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