In California, research demonstrates that the rapid development of the biofuels sector will result in the industry having an increasingly powerful impact on food prices and food security, according to Rosamond Naylor at a symposium at Stanford University last week.<\/p>\n
\u201cThe main part of this that I think is so significant is the use of mandates,\u201d Naylor said. \u201cPolicies such as the United States\u2019 Renewable Fuels Standard (RFS), which sets a national target of using 15 billion gallons of corn-based ethanol per year by 2015, have reshaped price and supply dynamics in both food and fuel markets. \u201c<\/p>\n
Because of the substitutability of basic food commodities, Naylor said, price volatility in the corn market has far-reaching consequences. \u201cPrices of corn ripple through all of the world food economy markets\u2026it affects the demand and supply of wheat and rice and soy, and other things,\u201d she explained. And for poor households in the developing world, she said, \u201cit has big income effects\u2026when you\u2019re spending 70 to 80 percent of your budget on food, you\u2019re going to be hurt the most.\u201d<\/p>\n