China takes it easy on biofuels

Biofuel is being blamed for the rapid increase in global agricultural prices, and China among others, are now rethinking development plans. Li Changping, a professor at Hebei University’s Rural Construction Research Center, said that the only reason the price of food is rising alongside the price of oil is because of the growth in biofuel, which is also leading investors to bet on the food futures markets. Some in the industry insist that the real causes are the soaring cost of crude oil, the weak dollar and growing food demand from developing countries like China and India. But the United Nations Food and Agricultural Organization (FAO) estimated in a recent report that cereal demand in China will rise only by 1.8% from 2007 to 2008. China has already imposed price controls and export restrictions on its agricultural sector. As early as 2006, it banned the use of corn and edible oil in the production of alternative fuels. Last year, it also suspended the issuance of new licenses for bioethanol production and cut off subsidies to some existing producers. (May 20, 2008)