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    Japan's Itochu Corp will team up with Brazilian state-run oil firm Petroleo Brasileiro SA to produce sugar cane-based bioethanol for biofuels, with plans to start exporting the biofuel to Japan around 2010. Itochu and Petrobras will grow sugarcane as well as build five to seven refineries in the northeastern state of Pernambuco. The two aim to produce 270 million liters (71.3 million gallons) of bioethanol a year, and target sales of around 130 billion yen (€800million / US$1billion) from exports of the products to Japan. Forbes - June 8, 2007.

    Italian refining group Saras is building one of Spain's largest flexible biodiesel plants. The 200,000 ton per year factory in Cartagena can handle a variety of vegetable oils. The plant is due to start up in 2008 and will rely on European as well as imported feedstocks such as palm oil. Reuters - June 7, 2007.

    The University of New Hampshire's Biodiesel Group is to test a fully automated process to convert waste vegetable oil into biodiesel. It has partnered with MPB Bioenergy, whose small-scale processor will be used in the trials. UNH Biodiesel Group - June 7, 2007.

    According to the Barbados Agricultural Management Company (BAMC), the Caribbean island state has a large enough potential to meet both its domestic ethanol needs (E10) and to export to international markets. BAMC is working with state actors to develop an entirely green biofuel production process based on bagasse and biomass. The Barbados Advocate - June 6, 2007.

    Energea, BioDiesel International and the Christof Group - three biodiesel producers from Austria - are negotiating with a number of Indonesian agribusiness companies to cooperate on biodiesel production, Austrian Commercial Counselor Raymund Gradt says. The three Austrian companies are leading technology solution providers for biodiesel production and currently produce a total of 440,000 tons of biodiesel per annum in Austria, more than half of their country’s annual demand of around 700,000-800,000 tons. In order to meet EU targets, they want to produce biodiesel abroad, where feedstocks and production is more competitive. BBJ - June 6, 2007.

    China will develop 200 million mu (13.3 million hectares) of forests by 2020 in order to supply the raw materials necessary for producing 6 million tons of biodiesel and biomass per year, state media reported today. InterFax China - June 6, 2007.

    British Petroleum is planning a biofuel production project in Indonesia. The plan is at an early stage, but will involve the establishment of an ethanol or biodiesel plant based on sugarcane or jatropha. The company is currently in talks with state-owned plantation and trading firm Rajawali Nusantara Indonesia (RNI) as its potential local partner for the project. Antara - June 6, 2007.

    A pilot project to produce biodiesel from used domestic vegetable oil is underway at the Canary Technological Institute in Gran Canaria. Marta Rodrigo, the woman heading up the team, said the project is part of the EU-wide Eramac scheme to encourage energy saving and the use of renewable energy. Tenerife News - June 6, 2007.

    Royal Dutch Shell Plc is expanding its fuel distribution infrastructure in Thailand by buying local petrol stations. The company will continue to provide premium petrol until market demand for gasohol (an petrol-ethanol mixture) climbs to 70-90%, which will prove customers are willing to switch to the biofuel. "What we focus on now is proving that our biofuel production technology is very friendly to engines", a company spokesman said. Bangkok Post - June 5, 2007.

    Abraaj, a Dubai-based firm, has bought the company Egyptian Fertilizers in order to benefit from rising demand for crops used to make biofuels. The Abraaj acquisition of all the shares of Egyptian Fertilizers values the company based in Suez at US$1.41 billion. Egyptian Fertilizers produces about 1.25 million tons a year of urea, a nitrogen-rich crystal used to enrich soils. The company plans to expand its production capacity by as much as 20 percent in the next two years on the expected global growth in biofuel production. International Herald Tribune - June 4, 2007.

    China and the US will soon sign a biofuel cooperation agreement involving second-generation fuels, a senior government official said. Ma Kai, director of the National Development and Reform Commission, said at a media briefing that vice premier Wu Yi discussed the pact with US Secretary of Energy Samuel Bodman and other US officials during the strategic economic dialogue last month. Forbes - June 4, 2007.

    German biogas company Schmack Biogas AG reports a 372% increase in revenue for the first quarter of the year, demonstrating its fast growth. Part of it is derived from takeovers. Solarserver [*German] - June 3, 2007.

    Anglo-Dutch oil giant Royal Dutch Shell PLC has suspended the export of 150,000 barrels per day of crude oil because of community unrest in southern Nigeria, a company spokesman said. Villagers from K-Dere in the restive Ogoniland had stormed the facility that feeds the Bonny export terminal, disrupting supply of crude. It was the second seizure in two weeks. Shell reported on May 15 that protesters occupied the same facility, causing a daily output loss of 170,000 barrels. Rigzone - June 2, 2007.

    Heathrow Airport has won approval to plan for the construction of a new 'green terminal', the buildings of which will be powered, heated and cooled by biomass. The new terminal, Heathrow East, should be completed in time for the 2012 London Olympics. The new buildings form part of operator BAA's £6.2bn 10-year investment programme to upgrade Heathrow. Transport Briefing - June 1, 2007.

    A new algae-biofuel company called LiveFuels Inc. secures US$10 million in series A financing. LiveFuels is a privately-backed company working towards the goal of creating commercially competitive biocrude oil from algae by 2010. PRNewswire - June 1, 2007.

    Covanta Holding Corp., a developer and operator of large-scale renewable energy projects, has agreed to purchase two biomass energy facilities and a biomass energy fuel management business from The AES Corp. According to the companies, the facilities are located in California's Central Valley and will add 75 MW to Covanta's portfolio of renewable energy plants. Alternative Energy Retailer - May 31, 2007.

    Two members of Iowa’s congressional delegation are proposing a study designed to increase the availability of ethanol across the country. Rep. Leonard Boswell, D-Ia., held a news conference Tuesday to announce that he has introduced a bill in the U.S. House, asking for a US$2 million study of the feasibility of transporting ethanol by pipeline. Sen. Tom Harkin, D-Ia., has introduced a similar bill in the Senate. Des Moines Register - May 30, 2007.

    A new market study by Frost & Sullivan Green Energy shows that the renewables industry in the EU is expanding at an extraordinary rate. Today biofuels and other renewables represent about 2.1 per cent of the EU's gross domestic product and account for 3.5 million jobs. The study forecasts that revenues from renewables in the world's largest economy are set to double, triple or increase even more over the next few years. Engineer Live - May 29, 2007.

    A project to evaluate barley’s potential in Canada’s rapidly evolving biofuels industry has received funding of $262,000 from the Biofuels Opportunities for Producers Initiative (BOPI). Western Barley Growers Association [*.pdf] - May 27, 2007.

    PNOC-Alternative Fuels Corporation (PNOC-AFC), the biofuel unit of Philippine National Oil Company, is planning to undertake an initial public offering next year or in 2009 so it can have its own cash and no longer rely on its parent for funding of biofuels projects. Manila Bulletin - May 27, 2007.

    TMO Renewables Limited, a producer of ethanol from biomass, has licensed the ERGO bioinformatics software developed and maintained by Integrated Genomics. TMO will utilize the genome analysis tools for gene annotation, metabolic reconstruction and enzyme data-mining as well as comparative genomics. The platform will enable the company to further understand and exploit its thermophilic strains used for the conversion of biomass into fuel. CheckBiotech - May 25, 2007.

    Melbourne-based Plantic Technologies Ltd., a company that makes biodegradable plastics from plants, said 20 million pounds (€29/US$39 million) it raised by selling shares on London's AIM will help pay for its first production line in Europe. Plantic Technologies [*.pdf] - May 25, 2007.

    Shell Hydrogen LLC and Virent Energy Systems have announced a five-year joint development agreement to develop further and commercialize Virent's BioForming technology platform for the production of hydrogen from biomass. Virent Energy Systems [*.pdf] - May 24, 2007.

    Spanish energy and engineering group Abengoa will spend more than €1 billion (US$1.35 billion) over the next three years to boost its bioethanol production, Chairman Javier Salgado said on Tuesday. The firm is studying building four new plants in Europe and another four in the United States. Reuters - May 23, 2007.

    According to The Nikkei, Toyota is about to introduce flex-fuel cars in Brazil, at a time when 8 out of 10 new cars sold in the country are already flex fuel. Brazilians prefer ethanol because it is about half the price of gasoline. Forbes - May 22, 2007.

    Virgin Trains is conducting biodiesel tests with one of its diesel engines and will be running a Voyager train on a 20 percent biodiesel blend in the summer. Virgin Trains Media Room - May 22, 2007.

    Australian mining and earthmoving contractor Piacentini & Son will use biodiesel from South Perth's Australian Renewable Fuels across its entire fleet, with plans to purchase up to 8 million litres from the company in the next 12 months. Tests with B20 began in October 2006 and Piacentinis reports very positive results for economy, power and maintenance. Western Australia Business News - May 22, 2007.

    Malaysia's Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui announces he will head a delegation to the EU in June, "to counter European anti-palm oil activists on their own home ground". The South East Asian palm oil industry is seen by many European civil society organisations and policy makers as unsustainable and responsible for heavy deforestation. Malaysia Star - May 20, 2007.

    Paraguay and Brazil kick off a top-level seminar on biofuels, cooperation on which they see as 'strategic' from an energy security perspective. 'Biocombustiveis Paraguai-Brasil: Integração, Produção e Oportunidade de Negócios' is a top-level meeting bringing together the leaders of both countries as well as energy and agricultural experts. The aim is to internationalise the biofuels industry and to use it as a tool to strengthen regional integration and South-South cooperation. PanoramaBrasil [*Portuguese] - May 19, 2007.

    Portugal's Galp Energia SGPS and Petrobras SA have signed a memorandum of understanding to set up a biofuels joint venture. The joint venture will undertake technical and financial feasibility studies to set up a plant in Brazil to export biofuels to Portugal. Forbes - May 19, 2007.


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Friday, June 08, 2007

Food import bills reach a record high, biofuels partly to blame

Global food import bills are increasing, partly due to soaring demand for biofuels, according to FAO’s latest Food Outlook report. Global expenditures on imported foodstuffs look set to surpass US$400 billion in 2007, almost 5 percent above the record of the previous year.

The data once again immediately bring up the issue of global trade regimes and agricultural subsidies. Countries with a very large food production potential - like the DRCongo, Mozambique or Angola - are net food importers.

To the dismay of development economists and civil society organisations alike, farm subsidies in the EU and the US prevent investments in domestic food production in these countries. Their dependence on imported food means they are vulnerable to global price fluctuations that are beginning to be influenced by (subsidised) biofuels. For net exporters, the price increases are a blessing.

Over the long term, the FAO said earlier, biofuels can fundamentally boost food production and help alleviate poverty (earlier post).

The FAO's latest Food Outlook notes that rising prices of imported coarse grains and vegetable oils – the commodity groups that feature most heavily in biofuel production – account for the bulk of the increase. Import bills for these commodities are forecast to rise by as much as 13 percent from 2006, the report said.

Contrary to other reports, the report states that more expensive feed ingredients will lead to higher prices for meat and dairy products, raising expenditures on imports of those commodities. In several cases, such as for meat and rice, larger world purchases are likely to drive import bills up.

In the case of sugar, generally high and volatile prices could lead to smaller import volumes, which is likely to result in a drop in the cost of global sugar imports, the report said.

Record-high international freight rates have also affected the import value of all commodities, putting additional pressure on countries’ abilities to cover their food import bills:
:: :: :: :: :: :: :: :: :: :: :: :: ::

Poor pay more
Developing countries as a whole are anticipated to face a 9 percent increase in overall food import expenditures in 2007. The more economically vulnerable countries are forecast to be most affected, with total expenditures by low-income food-deficit (LIFDC) and least developed countries (LDCs) expected to rise by 10 percent from last year.

“The food import basket for the least developed countries in 2007 is expected to cost roughly 90 percent more than it did in 2000,” said FAO economist Adam Prakash. “This is in stark contrast to the 22 percent growth in developed country import bills over the same period.”

Production up, but so is demand
World cereal production in 2007 is forecast to reach 2125 million tonnes, up 6 percent from the reduced level in 2006 and higher than FAO’s previous forecast in May.

"The prospect of a strong recovery in global cereal production in 2007 is a positive development, but total supplies will still be barely adequate to meet the expected rise in demand, not only from the traditional food and feed sectors but in particular from the fast-growing biofuels industry," said Abdolreza Abbassian, one of the authors of the report. "This means prices for most cereals are likely to remain high in the coming year."

FAO’s tentative forecast for rice production this year stands at around 633 million tonnes, matching last year’s record level, but with production still running short of consumption. Global rice reserves are forecast to shrink and higher price levels are anticipated.

Global cassava production in 2007 could surpass last year’s record level, due largely to measures to increase utilization of the crop in the larger producing countries, especially for industrial usage, including ethanol production.

Oilseeds

Oilseeds and meal prices have continued to rise, largely due to surging feed grain prices. Unusually high maize prices are dragging up soybean prices as the two commodities are competing in both the feed and energy markets. First forecasts for the 2007/08 marketing season suggest that the steady growth in global oilseed production could come to a halt, however, as maize cultivation is likely to expand at the expense of soybeans.

Meat and dairy
Increased consumer confidence, following a reduced incidence of animal disease outbreaks in the past year, should result in a recovery in meat demand in developing countries in 2007, the report said. Global meat exports are anticipated to increase by 3.8 percent as trade bans are gradually lifted and markets return to more normal patterns.

Poultry prices have recovered after declining by 18 percent in early 2006, mainly because of outbreaks of avian influenza. By March 2007, export prices in the United States and Brazil, which together supply 70 percent of global trade, increased by 20 percent and 14 percent, respectively, from their 2006 annual averages.

FAO’s meat price index has significantly recovered from a low in 2006 and, in March 2007, stood 7.6 percent higher than in March 2006. Moreover, rising feed prices are putting further upward pressure on meat prices, according to the report.

Prices of dairy products are currently at historically high levels. The FAO price index of traded dairy products has risen by 46 percent since November 2006. International prices for milk powders have increased most, as stocks in the European Union have disappeared.

The outlook for 2007 is for stronger growth in global milk supply, which may increase by 2.7 percent, sustained largely by expansion in those countries more responsive to international prices. Drought in Australia, suspension of milk powder exports by India, and Argentina’s export taxes are restraining export supply in the short term. However, EU dairy policy reform is changing the structure of international markets as its export market share declines, creating opportunities for emerging exporters, the report said.

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