Accelerated biofuel mandates risk tightening global crop markets through 2030: report

Rapid biofuel mandates could intensify competition for key agricultural commodities through 2030, potentially driving up prices, according to research from Chatham House and the Forest Stewardship Council. The study predicts a surge in demand for up to 36 million additional hectares of global cropland by 2030, an area equivalent to Germany, due to expanding biofuel targets.

This additional cropland pressure, rather than forest clearing, arises from announced mandates and targets, not a forecast of deforestation. Currently, 32 million hectares are used to produce biofuel feedstocks, with demand growth previously expected to require another 20 million hectares by 2030. The new expansion could bring the total land footprint to approximately 68 million hectares.

The increased demand could disrupt food and feed markets, especially as governments seek to reduce their exposure to oil-supply disruptions. Corn and vegetable oil markets would be most directly affected due to existing ethanol demand, with corn-based ethanol demand accounting for around 40% of US corn consumption. Higher biodiesel and renewable diesel output could further strain corn markets, as well as vegetable oil markets.

India, with expanding ethanol blending, serves as an example of the growing competition between food, feed, and fuel markets. Corn and rice are both used as ethanol feedstocks, which could support farmgate prices but also expose processors and livestock producers to higher raw-material costs. The report's warning comes amid potential agricultural market disruption from a severe El Niño event.

Indonesia's push towards a 50% palm oil biodiesel blend could significantly impact vegetable oil supply and trade, potentially reducing the volume of Indonesian palm oil available for export if domestic biodiesel consumption rises.