China will not suffer food scarcity or fluctuations in the price of agricultural products, despite its plans to produce biofuels from crops, according to a Chinese expert in energy research. "The Chinese government gives top priority to food security," said Zhou Fengqi, former director-general of the Energy Research Institute under the National Development and Reform Committee, China's top economic policy-making agency.

Zhou was responding to a report released this week (4 July) by the Organisation for Economic Development (OECD) and the United Nations Food and Agriculture Organisation (FAO). The report, 'Agricultural Outlook 2007–2016', claims that increasing demand for biofuels is causing fundamental changes to agricultural markets that could drive up world prices for many farm products.

This is a particular concern for developing countries that are net food importers, as well as for developing world farmers who need to purchase feedstock. Zhou points out that, compared with other biofuel producers such as the United States, China's production of biofuel and its demand for raw materials is small. Last year, China consumed 2.7 million tons of corn, or two per cent of its total yield, to produce 850,000 tons of ethanol fuel, whereas the United States used 55 million tons of corn for ethanol production.

But the OECD–FAO report estimates that Chinese ethanol output will rise to 3.8 billion litres annually in 2016, a two billion litre increase over present levels. This estimate falls well short of China's plans to increase its ethanol production to two million tons in 2010 and ten million tons, equivalent to 13 billion litres, in 2020.

But the country has every intention of safeguarding its food supply. Last month, China's State Council said that non-staple crops in China, such as sorghum, batata and cassava, will be used to make ethanol, instead of corn, which is a staple crop. The council also announced that arable land would not be used to grow crops to produce ethanol, and that there would be no large-scale consumption of grain or damage to the environment.

The OECD–FAO report points out that although temporary factors such as drought in wheat-growing regions and low stocks might explain recent increases in farm commodity prices, there are also structural changes underway in global agricultural markets that could keep prices high for many agricultural products over the coming decade. The report's authors estimate that by 2016, the United States will double the amount of ethanol it produces from maize, and Brazil will increase its production from 21 to 44 billion litres.
(SciDev.Net, 06/07/2007)