The US government has once again signalled its support for biofuel production with the award of almost US$100 in loans to support four projects.

The US Department of Agriculture has loaned a combined $97m as part of its push to encourage renewable energy production.

The projects – two in Illinois, one in North Carolina and one in Georgia – will get the cash to fund schemes including the building of biodiesel plants.

Rising biofuel production, particularly in the US, has been cited as a key factor in the soaring cost of raw materials for food producers, who have warned that food prices may rise, a phenomena dubbed “agflation”.

Last month, Nestlé chief Peter Brabeck-Letmathe warned of a “significant and long-lasting” rise in food prices due to, in part, the use of crops in biofuels.

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By GlobalData

On the other hand, the European Commission has claimed has dismissed the link between biofuel production and higher food prices.

The Commission cited a stagnating and aging population in the EU that will eat significantly less meat than levels seen in the last decade, depressing demand for meat and cereals.

Limited domestic and foreign markets will therefore reduce feed demand in the EU, increasing the availability of feedstock and land for biofuel production, heading off price rises for food and ingredients, the Commission said.