12/03/2008 (Daily Times, Pakistan), Islamabad - The use of agriculture commodities for making bio fuels in major developed and developing countries has not only decreased the availability of essential agriculture commodities in international market but also increased their prices many fold for food importing countries including Pakistan.

The economic and agricultural experts were of the view that the survival of country lies with major change in the agriculture policies.

The country should be able to export and earn precious foreign exchange.

The food prices in Pakistan have increased in response to many factors: higher energy and fertilizer prices; increased demand for bio-fuels, especially in the US and the European Union; and droughts in Australia and other countries. World grain stocks are at record lows and next year’s prices depend on the success of the next harvest season.

The demand for bio fuels will also probably further rise. A quarter of the US maize crop (11 percent of the global crop) went into bio fuel production this year, and the US supplies more than 60 percent of world maize exports. Notably, the US—one of more than 20 countries to require bio fuels use—has just doubled its bio fuels mandate by 2015.

In addition, surplus production capacity is scarce. The EU’s ‘set aside’ lands, originally intended to keep surpluses low, have already been brought into production. And US Conservation Reserve lands would give low yields even supposing legislation to move them into production was in the works.

Wheat prices have increased by 200 percent in terms of US dollar, and overall food prices have risen by 75 percent (US dollars) since the turn of the century.

The people of Pakistan have spent about 70 percent of their meager incomes on food, making price rises unbearable.

Drought and bad weather, high oil prices stoking transport costs, spiking bio fuel demand and low reserves have also played their part, agricultural experts added.

The high cost of crude oil, which hit record levels this month with $106 per barrel has made bio fuel production commercially viable. Farmers in several countries were switching to growing crops such as corn to feed the bio fuel industry rather than crops destined for the dinner table.

The UN food agency’s figures show the amount of US maize used for bio fuel has doubled since 2003, and predict European wheat use for ethanol could rise 12-fold by 2016. Such trends have led worried Asian governments including Pakistan to address the rise in food prices following popular unrest.

Pakistan is also confronting multiple problems such as producing sufficient wheat quantity to meet domestic demand and also to keep its prices at reasonable level. The government has fixed wheat target of 24 million tonnes for the current year despite the fact that 2 percent less area was available for wheat production.

Indonesia and Malaysia were the world biggest producers of palm oil that were used as raw material for cooking industry in several developing countries including Pakistan. These countries converted palm oil for the production of bio diesel. At international level, the prices of palm oil rose from $350 to $1250 per metric tonnes and probably it will further rise in future. In return, it raises ghee prices in Pakistan to Rs140/kg.

Pakistan meets 48 percent edible oil requirement from local resources and 52 percent through imports. But when the international oil prices rises, the local manufacturers also increase its prices, and the experts termed it unjustifiable.