Photo: politic.am

The main reason for the rise in prices for most food products in the world was the boom in the production of vegetable fuels and the explosive growth in demand for agricultural raw materials.

Among the key crops that biofuel producers focused on were corn, soybeans, palm oil and sugar. The demand for them has grown many times over both from food producers amid the pandemic and from energy companies. The latter, in particular in the USA, are actively reconstructing oil refining facilities for the production of “green” diesel fuel. This led to the fact that corn, beans and palm oil in world markets more than doubled, and sugar – by 50%.

Energy companies could increase their production of biofuels by more than six times in the next few years. To do this, they intend to increase the use of discarded animal fats, used vegetable oil and distilled corn oil, not to mention an increase in demand for corn, soybeans, palm oil and sugar. Therefore the upward trend in food prices will continue until at least 2023.

In the European Union the authorities are already taking measures to limit the use of food as raw materials for biofuel production. Almost 60% of the biodiesel feedstock consumed in the EU was imported, mainly palm oil. The rest is rapeseed, used vegetable oil and animal fat.

Source: Bloomberg