Question

Case Study
Global Demand for Palm Oil Growing Rapidly

   The global demand for palm oil is rapidly growing. Thomas Mielke, executive director of ISTA Mielke GmBH which produces Oil World, projected that demand for palm oil would increase to between 62-63 million tonnes by 2015 compared to 45.5 million tonnes in 2010. However, major producers such as Malaysia and Indonesia are facing obstacles in meeting the growing demand.
   Palm oil comprising 57% of global vegetables oil exports, saw a below average global output growth of 500,000 tonnes in 2010. Indonesia, its biggest producer and exporter, needs to boost plantings to between 350,000 and 400,000 ha per year to satisfy future demand, yet its acreage expansion slowed in 2009 and 2010 which Mielke expects to restrict production in coming years. Malaysia’s output has declined in the same period, along with facing poor fresh fruit bunches (FFB) harvesting caused by shortage of labour, slow replanting and disappointing yields.
   La Nina, fertilizer cuts and shortage of labour have also led to a dip in palm oil stocks. However, Mielke expects output and stocks to recover in the short term, thereby limiting the adverse effects of low stock and struggle in expanding acreage. He further added that global demand for palm oil and other oilseeds from the food, oleochemical and biofuel industries will continue to rise.
   Moreover, limiting factors such as land, water and logistics are intensifying the conflict between food and fuel needs, Mielke said. He also noted that for biodiesel production, there is a need to source for alternative feedstocks.

Source: Adapted from The Star, 10 March 2011

Questions
Explain how the production of biodiesel (fuel) affects the production of food?   

Answer 1

Key points from the case:

Plan oil demand is likely to go up but productivity, fertilizer cuts and shortage of labour have led to a dip in palm oil stocks.But these effects are likely to be short term. Biodiesel production uses substitutes for palm oils.

Question: Explain how the production of biodiesel (fuel) affects the production of food?   

As mentioned above, biodiesel needs mixing up of food crops, example can be corn, if more and more corn is used to make liquid that is to be mixed with oil to make it biodiesel then demand for corn as a food and as a full will go up. This will create shortage and same can happen with other food crops and hence production of biodiesel (fuel) affects the production of food.