International perspective

Implications: High US corn and other seed demand and consequent price rises should increase planting in USA and Europe.

High demand for bio-fuel may reduce materials available and raise prices for bio-plastics, which may temporarily slow down their uptake.



Analysis:
The recent new emphasis by President Bush on bio-fuels to reduce dependence on overseas oil supplies will exacerbate the price rise in the short-to-medium term. It will presumably encourage increased planting of crops suitable for bio-fuel production as farmers are attracted by the new market and high prices, not only in USA but in Europe, South America and Asia too.However, this emphasis on fuel crops will also impact availability and prices of feedstock for new plastics, just as these are beginning to play a serious part in the packaging supply chain. In UK, leading multiple retailer Sainsbury, a major specifier, has announced substantial switch to compostable plastic (PLA) packages. Word has it that these materials are commercially viable at present but will this remain the case if crops focus on fuel supply growth ? The impact of price rises on the viability of bio-plastics could cause a delay in the benefits of their uptake not only from changes of source countries (security; logistics) but also from reduction of use of finite resources in favor of sustainability. As ever, the butterfly may flap its wings in USA but the wind may be felt elsewhere.

Eventually greater planting and switching to crops suited to production of bio-plastics will take place in all regions but the balance of supply, demand and price stability will take some time to arrive.