Food prices would be “significantly lower” if biofuels weren’t being propped up by government, according to a new report from the European Union’s Joint Research Centre.
If the EU didn’t support the alternative fuel sources, the price of foods like vegetable oil would be 50 percent lower by 2020 – and 15 percent lower here in America, the report said.
“Given that more than half of the vegetable oils are used for biodiesel production in the base in 2020, any decrease in biodiesel production strongly affects the vegetable oil market,” the report said.
The reason for the difference between the drop in EU vegetable oil prices and world vegetable oil prices is that in the rest of the world, only 17 percent of vegetable oils are used to produce biofuels, while the EU uses more than half.
Other foods would also see a price reduction, although not as significant. Wheat prices would fall by 7 percent, corn prices would fall by 6 percent, and barley prices would fall by 4 percent, according to the report.
Of course, these three commodities are used in much smaller percentages for biofuel production. Prices for wheat, corn, barley and sugar would fall by about 5 percent in the rest of the world.