Biofuel industry says oil hike driving food prices

AMSTERDAM (Reuters) - Leaders of the biofuels industry are challenging critics who argue that converting food to fuel is driving up food prices, saying higher energy costs and other factors are more important.

"Energy is the blood of the world, so if oil goes up then other commodities follow," Claus Sauter, Chief Executive of German bioenergy firm Verbio said on Wednesday.

Brent and U.S. crude set new record highs on Wednesday, edging closer to $100 a barrel, bolstered by supply concerns and a weak dollar.

Industry executives at an ethanol conference in Amsterdam said higher energy prices were increasing transports costs and making agricultural tools reliant on fuel more expensive, thereby contributing to higher food costs.

"Fertilisers are becoming more expensive, and other products from the fuel market, and that's one of the reasons that food prices are increasing," Marcos Sawaya Jank, president of the Brazilian sugar cane association, said.

Biofuels, made from food crops like sugar cane, rapeseed and palm oil, are seen as an important alternative to conventional transport fuels like gasoline and diesel as oil supplies become more concentrated among a few producing countries.

But by using such crops, biofuels potentially compete with food production, threatening higher food prices.

Both growing demand for biofuels and record oil prices would drive shortages of foodstuffs and rising food price inflation, a senior analyst with the U.N.'s food body, the Food and Agriculture Organisation (FAO), said on Wednesday.

Earlier this year, the Food and Agriculture Organization and the Organisation for Economic Cooperation and Development said biofuels were "one of the main drivers" for projected food price hikes of 20-50 percent by 2016.