The World Food Bank recently released a report saying food prices world-wide are now at “dangerous levels,” having gone up 29 percent in the past year alone. This clearly could contribute to political instability and push millions of people into poverty.
In actuality, it already has. It is no accident that the revolution now sweeping the Arab world primarily is centered in countries that import much of their food.
Food inflation should come as no surprise to those who shop at supermarkets in the United States, where checkout-counter shock is endemic. Grocers and wholesalers say it is not their fault. Farmers say they should not be blamed, for their costs have skyrocketed, too. Well, then, who or what is responsible?
Well, yes, ethanol does increase the cost of corn. Our reliance on the automobile for transportation instead of developing mass transit contributes to the increased cost of corn and oil which is now around $100/barrel up from around $70.
It should be noted that corn fed livestock also increases the cost of corn. It is known that this is a very inefficient way of feeding the world’s population, and probably the product isn’t all that healthy for us beef eaters.
It should also be noted that the increased cost of oil results in the increased cost of producing corn and of getting food to the marketplace both here and around the world.
It should also be noted that the cost of food has been seriously impacted by the weather. The weather has affected the Russian wheat crop and the Indian onion crop. It has also affected the cost of coffee. The list goes on.
It’s a matter of supply and demand. The supply of food, including corn (artificially?) diverted to other uses, is not keeping up with the demand. And part of the increase in demand is that there are many more people who can afford to eat more and better.
“Supply and demand,” of course. But it is not as simple as “corn diverted to other uses.” That would not explain either the cost of coffee or onions soaring. Those are weather related. Famines have been know as far back as Old Testament times. Seems there was a big one in Egypt about the time of Joseph and his sons.
As for population being a factor, that too is debatable. Even as people in Africa are starving, Americans are overweight. In other words, if we were able to find a way to see that food was distributed in a more equitable manner we would find that the earth produces enough to feed all.
Even with respect to corn, there was an issue before ethanol. I have forgotten the actual numbers, but the amount of corn required for the beef in a hamburger would sustain someone for several days. The legionary in ancient Rome sustained himself for several days on the march with a modus of grain which he carried along with the rest of his battle gear and ate very little animal protein.
[b] 3# Septuagenarian[/b],
There may have been some problems with corn supplies before ethanol, but the dramatic increase in wheat prices that occurred beginning in 2007-2008 (from less than $3.00/bushel to more than $12.00/bushel, as best I recall) are directly correlated with, and a result of, the Bush administration’s decision to subsidize the use of corn to increase production of ethanol. Large numbers of wheat farmers plowed under their already planted winter wheat and shifted to planting corn (this is based on personal knowledge as well as published reports). That is what happens when an entity the size of the U.S. government guarantees a price for one commodity but not for alternative commodities—farmers seeking secure profits can obtain them by shifting their production to the government-subsidized crop.
The Law of Unintended Consequences on display at work!
[i]Pax et bonum[/i],
Keith Töpfer
I have no idea what your point is. I grant that the use of ethanol increases the cost of food. I have stated it three times in this tread now.
But to focus solely on ethanol use to explain the increase in food prices in 2011 is to miss the other factors affecting the price of food. I have indicated some of the other factors including weather and fuel costs. So too does the farm subsidies for a broad range of agricultural products. It was interesting that when the House was proposing budget cutting amendments before the recess, Democrats proposed ending farm subsidies (which artificially increase the cost of food), but the GOP budget hawks all said in effect with one voice, “You’ve stop preaching and started meddling.” Farm subsidies will continue to increase both the deficits and food prices.