Biofuels: Development or Disaster

Early 2008 saw agricultural commodity prices rise at rates that have not been witnessed in nearly 40 years. When considering the cause of this rise, one can mention the standard list of factors including growing demand from better diets as countries become wealthier, reduced yields from adverse weather shocks, and increased production costs from energy and other sources. However, a new factor has been attracting a lot of attention: the increased production of biofuels. Since 2005, worldwide ethanol production has nearly doubled and biodiesel production has increased nearly three-fold. The United States has boosted use of corn and soybean oil for its biofuels production, while the EU has increased use of wheat, barley, and soybeans for biofuels production, and Brazil has continued to ramp up sugar-based ethanol production .

The aim of this report was to investigate the negative destruction or the future crisis that can occur to the world globally due to extensive use of Biofuels. The scope of research for the report was limited to the analysis of the three major Biofuel producers of the world namely: Brazil, United States and Europe and it was timely found that not only they are leading to a major Labour exploitation in Sub- Saharan African countries and deforestation around Amazon basin. Also, the current state of play around over US$20 billion in subsidies and other forms of government support to the production and consumption of biofuels globally under the influence of three dynamic factors: the "food versus fuel" debate, advanced biofuels developments and the austerity policies necessitated by the financial and economic crisis. On the other hand it can be seen that there has been major fluctuations happening in Europe's biofuels prices and the European Government has become really pick over the issue that from where the biofuel is getting imported.

Thus, the report can be concluded by saying that a surge in commodities prices is a result of numerous factors including a weak dollar, expanding domestic and global biofuel production capacity, low commodity stocks due to global weather situations, increased energy and transportation costs, and the strength of global food demand.

It is recommended that, as most social and environmental costs and benefits of biofuel production and use are not priced in the market, to ensure a generally favorable outcome, clear and comprehensive public policy choices are critically needed.