Is the world on the brink of another food crisis?
It has become a distressingly familiar question. With the price of agricultural staples such as corn, soyabeans and wheat soaring for the third summer in five years, the prospect of another price shock is once again becoming a prominent concern for investors and politicians alike.
The debate marks a dramatic shift from just a few weeks ago, when traders were expecting bumper crops and policy makers were comforting themselves that ”“ if nothing else ”“ falling commodity prices would offer some relief to the troubled global economy.
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It doesn’t take a genius to realize that a major shift in the USA’s output of its corn production to the manufacture of ethanol as a gasoline component could reduce the amount of corn available for export to other countries and could also dramatically raise the price of corn exported for human consumption. This increase in the cost of ‘corn-for-food’ will hurt cash poor third world countries the most. Many of which are often on the verge of starvation due to inadequate amounts of domestically raised food grains.
Its also obvious that a drought (which occur with an erratic frequency in the central USA) could also diminish the total amount of corn available for both food and ethanol.
The USA finds itself into this ‘corn-for-ethanol-versus-food’ situation as the result of collusioncollusion between gasoline hating radical environmentalists and large-scale farmers (read agro-businesses and NOT family farms).
So now we are faced with a moral problem and an energy problem.
I saw a report about this on the TV news last week. I was astonished to hear a farmer say he doesn’t irrigate so he’s not set up to handle high heat and drought like this. His corn and soybeans were 25 percent of where they should be.
As a life long farmer, I would like to remind everyone what a wise man told me once. High prices will cure high prices.
“High prices will cure high prices.”
For countries that can barely afford to buy and import the grains that they depend upon to avoid starvation, higher grains prices can and probably will result in some level of starvation.
Our dependence on ethanol for vehicle fuel that is derived from food grain is not necessary. All that we need to do is to tell the radical environmentalists to ‘go to Sheol’ and start opening up our ample fuel resources.
Meanwhile, farmers can return to raising grain to feed people.
#4 All the blenders tax credits for ethanol have expired. The price of oil is falling and the price of corn is soaring. Your wish may come true because the ethanol industry emerged because of the billions of bushels of corn the US had in carryover for so many years. Corn ethanol won’t work with cheaper oil and high priced corn. The plants will either go bankrupt or be mothballed if this trend continues.
I agree with you that if we could bring the price of oil back down to 1980’s era prices, their would not be a need for ethanol. US farmers, not including 50 year droughts are making record corn crops. Plant breeding and technology are pushing yields higher. About 25% of the US corn crop is used for ethanol production, the same % is exported. The vast majority is used to feed livestock. If farmers were to totaly loose the ethanol industry corn prices would fall far below procuction cost.
That being said, 90% of the ethanol plants in the US are farmer and community owned. Midwestern communities feed up with high production cost due to high crude oil and cheap corn set out to change their bottom lines; their goal certainly wasn’t a left wing political movement. Americans have come to expect cheap gas and cheap food, that way they have enough extra money to buy all their “stuff”. Usually sometime in January or early February is the day that the average American has made enough money to pay for his yearly food expense.
We enjoy the safest and cheapest food in the history of mankind. Most people don’t realize, Even with 7 dollar a bushel wheat, the plastic(petroleum) wrapper that your loaf of bread comes in cost more than the wheat that the bread is made from.