Summary
The debate continues on whether biofuel production has adverse impacts on food supply and production. However another way of looking at the question is whether, in the absence of subsidies, biofuels can compete with food.
Analysis
Biofuels have been blamed for rises in food prices at various times in recent years, leading at one stage to a UN official describing biofuels as a "crime against humanity", a rather extravagant charge putting biofuels in the same category as genocide etc.
However the direct evidence seems mixed and while there are cases of increases in biofuel production being correlated with increases in food prices, food prices are affected by numerous forces on both the demand and supply sides. Prior to the recession, strong world growth that pushed up oil prices and biofuel production also pushed up the prices of food commodities. Energy is also an important input to agricultural production so increases in energy costs, stimulating growth in biofuels, also increase costs of agricultural production. And just as there are examples of food prices being positively correlated with growth in biofuel production, there are also opposite examples at other times, as in the case of sugar.
However another way of looking at the question is to ask whether biofuels have a natural competitive advantage over food in the use of agricultural feedstocks and the answer seems to be no. People are generally prepared to pay more for food than for energy, which is cheap by comparison. (For example compare the price of a liter of vegetable oil at the supermarket with a liter of diesel). Biofuel production is also commercially risky because there is no necessary relationship between oil prices (driving revenue) and agricultural feedstock costs. In the absence of biofuel mandates and subsidies, biofuels are likely to have trouble competing with food. Left to itself the market will determine the allocation of resources between food and biofuels. However subsidies, mandates and other government policies providing artificial support for biofuels may well have unintended consequences for food. For all of these reasons second-generation feedstocks that are outside the food chain are the most promising option for biofuels.
