Today we are at the middle of the week and had already considerable ups and down.

Sunday IWF, World Bank the G7 community discussed controversial about the subprime crisis, business prescription and regulation. Also the soaring food prices were one of their key focus points. There are different aspects to both, but the topics aren’t independent.

It took about one day to get the message about soaring food prices in conjunction with biomass production to the regional and local newspapers. This is that important because most of the people believe that growth (and velocity on high-speed highways) is unlimited as we have an alternative for fossil oil. On top to this is the claim “biomass is green” as this got straight to the mind of people. “Energy consumption isn’t bad anymore”

Tuesday the EU commission announced to cut the subsidies for biomass production. Not only the European countries, but also USA should follow this direction. As everybody knows how strong the lobby between each government and their farmers is, one can imagine the power of the statement “biomass market is existing and doesn’t need additional protection”. Does that imply a cut in farmer’s income? In Europe subsidies are about 90 M€, more than nothing, but considerable less compared to the UN Food Program.

Taking about a change in agriculture is now on all radar. A NY-Times contribution from today gets it all together: agriculture, growth, and biodiversity.

Next Russia and Brazil influenced the tense in the oil discussion. The Russian drop by 1% was enough to hit the news. Although enough comments decreased the impact of this drop on long-term European provisioning, oil prices went up and this continued over last hours.

This is independent of the large oil reserve which was discovered over last couple of days in Brazil. But also inflation impacts in India are foreseeable.

What is the net result of these messages? Clear, the oil prices don’t come down anymore. So also energy will become more expensive. Is that also fact for food prices? What if energy consumption comes down: does food prices get down as well? Or is food market one of the successors of oil market.

Paul Centen

Orginally posted April 16, 2008