From The Economist we learn about the growing market for biodiesel from vegetable oils.

In the past few years a new source of demand has emerged for vegetable oils. Biodiesel production has rapidly accelerated and now consumes over a tenth of the global vegetable-oil crop. Depending on the crude-oil price and governments’ enthusiasm for mandating biofuels it could account for as much as a fifth by 2020, according to Peter Thoenes of the UN Food and Agriculture Organisation.

As the chart below reveals, vegetable oils are being made out of many different sources including palm, soyabean, rapeseed (canola) and sunflower seeds.



The rapid demand for certain sources is causing supply shortages.   Competition for land is the main concern for soyabeans.  Farmers in the US, the world’s top exporter, and Brazil, in second place, are switching to corn as high prices make it more attractive.  Palm oil also suffers from supply problems.  Found in Indonesia and Malaysia, farners are not able to quickly increase output in an already widely cultivated environment. Creating new higher-yielding strains is much easier and quicker for annual crops like wheat than for perennials such as palm trees that take time to mature and will bear fruit for many years.

Environmentalists have raised concern that the spread of palm-oil plantations is the greatest threat to forests in Indonesia and Malaysia. In response, this past May Indonesia introduced a two-year moratorium on forest clearance for palm oil.

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