Global warming threat has forced all developing nations to go for bio-fuel in a big way. The case of India is also not different.

However, the increased demand for bio-fuel has fueled the prices of edible oil and oilseeds. There has been a surge in demand for fuel, mainly from the EU countries.

The EU has been importing vegetable oil from South America for producing bio-diesel as refined rapeseed oil is used for direct injection into trucks as fuel. Consequently, the demand of raw materials producing bio-fuel has been increasing across the globe.

Considering the need to opt for bio-fuel, India is also planning to make 5 per cent ethanol blending mandatory by 2008.

Globally, bio-diesel production based on farm products such as cereals, sugarcane, oilseeds are influenced by the bio-fuel policies announced by the US, Brazil, Canada, Argentina, China and India.

Since these countries have embarked on many programmes based on bio-diesel, demand for maize, sugarcane, oilseeds will skyrocket in the near future, according to the latest report by the Organisation for Economic Co-operation and Development and Food and Agriculture Organization of the United Nations.

According to the report, the US may increase its ethanol production, predominantly based on domestic maize, by almost 50 per cent in 2007 and the growth is expected to decline thereafter.

Ethanol production in the US is expected to double between 2006 and 2016. Consequently, the use may reach 55 million tonnes.

Bio-diesel production, in contrast, may remain limited to the US due to lower profitability caused by high feedstock costs. Soya oil use for bio-diesel production is expected to reach 2 million tonnes in 2007 and to 2.3 million tonnes by 2011.

The EU, which has been using oilseeds, may now pay more attention on using wheat and maize for bio-fuel production.

Despite an expected growth in bio-fuel use by 170 per cent between 2006 and 2010, its share in total transport fuel consumption will not exceed 3.3 per cent in energy terms, rather than the 5.75 per cent target set by the EU Biofuels Directive.

Use of feedstocks products, particularly wheat, is set to increase 12-fold and may reach 18 million tonnes by 2016. Growth in the use of oilseeds (largely rapeseed) and maize will reach 21 million tonnes and 5.2 million tonnes by 2016, respectively, the report added.

The report further said fuel ethanol production in China may grow steadily to reach 3.8 billion litres by 2016, up from 1.5 billion litres in 2006.

Most of the fuel ethanol may be based on maize though other feedstocks are also being used. The use of maize for fuel ethanol should exceed 9 million tonnes in 2016 compared with 3.5 million tonnes in 2006.

Ethanol production in Brazil is expected to reach 44 billion litres by 2016, 145 per cent more than what was produced in 2006. As ethanol yields per tonne of sugar are expected to increase, sugar cane used in ethanol production would grow less in relative terms.