Today, UN Secretary-General Ban Ki-moon said that rising food prices have developed into a global crisis. The New York Sun also paints a dire picture:
With prices for rice, wheat, and corn soaring, food-related unrest has broken out in places such as Haiti, Indonesia, and Afghanistan. Several countries have blocked the export of grain. There is even talk that governments could fall if they cannot bring food costs down
So, what’s behind rising food prices? One important factor is biofuels. For example, an estimated 30% of America’s corn crop now goes to fuel, not food. When we use food for non-food purposes, we shouldn’t be surprised when the price goes up. It’s simple economics:
“I don’t think anybody knows precisely how much ethanol contributes to the run-up in food prices, but the contribution is clearly substantial,” a professor of applied economics and law at the University of Minnesota, C. Ford Runge, said. A study by a
Washington think tank, the International Food Policy Research Institute, indicated that between a quarter and a third of the recent hike in commodities prices is attributable to biofuels.
Last year, Mr. Runge and a colleague, Benjamin Senauer, wrote an article in Foreign Affairs, “How Biofuels Could Starve the Poor.”
“We were criticized for being alarmist at the time,” Mr. Runge said. “I think our views, looking back a year, were probably too conservative.”
Ethanol was initially promoted as a vehicle for America to cut back on foreign oil. In recent years, biofuels have also been touted as a way to fight climate change, but the food crisis does not augur well for ethanol’s prospects.
“It takes around 400 pounds of corn to make 25 gallons of ethanol,” Mr. Senauer, also an applied economics professor at Minnesota, said. “It’s not going to be a very good diet but that’s roughly enough to keep an adult person alive for a year.”
More info here. NPR also had an interesting segment on food prices recently. Give it a listen here(the discussion shifts to biofuels a few minutes in).