Sugarcane ethanol: Contributions to climate change - BAFF

3.1. Effects on the supply side
Why are current food prices so high?
As mentioned above the variation of yields due to climatic conditions, the development of
input prices – fertilizer, diesel and pesticides – as well as the level of political support are
the main drivers of supply. �e following items provide some information on these points
(Figure 8):
• Poor harvests in Australia, Ukraine and Europe for wheat and barley. According to
FAO statistics, these three regions contributed on average 51% of total world barley
production and 27% of total world wheat production for the period 2005-2006.
• Lower harvests in wheat and barley are more than compensated by a bumper harvest
for maize worldwide.
– �erefore, world cereal production increased in total even in 2007.
– �e bumper harvest in maize kept maize prices low and the wheat-maize spread
increased signi�cantly (Figure 3).
– Only recently have maize prices also strongly increased.
• Higher energy prices lead to higher food prices as costs (e.g. fertilizer, processing, and
transport) increase. Higher transport costs induce higher price e�ects as distances
increase.
• CAP policies such as mandatory set-aside regulation or production quota restrained
supply. Furthermore, there was a change from price to income support and compensatory
payments became decoupled, set aside was introduced and export subsidies were
diminished. Some of these measures limited supply within the EU. However, the general
aim of the last CAP reforms was an enforcement of farmers’ ability to react to market
signals instead of following policy signals given by market price support. Measures
0.8
0.6
0.4
0.2
0.0
-0.2
-0.4
-0.6
-0.8
-1.0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Australia Canada EU (27) US
Figure 8. Deviation from trend in yields (wheat and coarse grains) in tons/ha. Source: OECD-FAO
Agricultural Outlook 2008-2017 (2008).
Sugarcane ethanol 233