Posts tagged “food prices”
From late 2007 through 2008, the global price of food saw an unprecedented upwards spike in prices, measured by the UN’s food price index, a broad measure of food prices. That spike was followed by another one in 2010 through early 2011 (see chart).
Here in the United States, we hardly felt the pinch at all. Food prices for the average American in the grocery store have almost no link to world food prices – as marketing, transportation, and processing can account for up to 80% of the total cost of food in the grocery store. However, major grain importing countries are sorely affected by these price spikes. For instance, as the Egyptian government continues to negotiate a new IMF loan, a sticking point is that over 9% of its total budget outlay is devoted to subsidizing food.
Upcoming I am off to Malaysia on Saturday for a business trip. I will actually spend some time in Bintulu, so I am looking forward to driving by and seeing Shell’s gas-to-liquids (GTL) plant there. I am unsure about my prospects for Internet access over the following week. When I was in India, I was without Internet for eight days, but I have been told that most likely I will have Internet for the duration of my stay. But this is a business trip, so I probably won’t have all that much time to write anyway. I do have three essays in the pipeline that I will trickle out while I am gone. The first is a guest essay from… Continue»
I mentioned it earlier in a post, but now the full text of the World Bank report blaming biofuels for 75% of the rise in food prices has been posted: A Note on Rising Food Prices I don’t have time to critique it right now, but wanted to call attention to it since many had questions about how the conclusions were reached. So, you now have access to it.
In the U.S. (and most of the developed world), people are accustomed to great convenience. We live in climate-controlled homes, wake up each morning, take a hot shower, and then eat a breakfast consisting of foods from halfway around the world. We hop into our cars, adjust the temperature, and head off to work. We fly across the country for a few hundred dollars. We send letters from coast to coast for 42 cents. For us, ‘inconvenience’ occurs when a store is closed on Sunday. ‘Those people’ living in far away places who have to put up with the inconvenience of intermittent power, no heating or cooling, and who have to walk everywhere they go (or ride packed buses/trains) are… Continue»
I got a kick out of this story from the newest issue of Subsidy Watch: New research from Missouri refutes allegations that ethanol mandates save money A report from a Missouri-based research organization debunks the claim that Missourians are saving money through a state law requiring that retail gasoline contain a minimum of 10% ethanol. The report is in reaction to an assertion by the Missouri Corn Merchandising Association (MCMA), alleging that Missourians will save more than US$ 285 million through the E-10 mandate in 2008, and nearly US$ 2 billion over the following decade. The MCMA arrived at these numbers by taking the price difference between pure-grade gasoline and E-10 blended fuel, and multiplying it by Missouri’s projected annual… Continue»
Couple of ethanol-related stories of note in the past few days: Corn prices hurt ethanol industry Iowa’s ethanol industry is being squeezed by high corn prices that are partly due to the estimated 3.3 million acres of crops that have been destroyed by spring floods, Iowa Secretary of Agriculture Bill Northey said Friday. “These kinds of prices are not profitable to produce ethanol at the current ethanol price,” Northey said at a taping of Iowa Public Television’s “Iowa Press.” “There will probably be decisions of whether they want to keep processing or not at these prices.” Farmers can replant and still be covered by crop insurance, but coverage levels drop with each passing day, and late-planted crops could face the… Continue»
As I have been arguing for years, this is not going to have a happy ending. Some day we will look back on this ethanol mandate fiasco as one of the greatest mistakes ever in American energy policy: Riots, instability spread as food prices skyrocket (CNN) — Riots from Haiti to Bangladesh to Egypt over the soaring costs of basic foods have brought the issue to a boiling point and catapulted it to the forefront of the world’s attention, the head of an agency focused on global development said Monday. “This is the world’s big story,” said Jeffrey Sachs, director of Columbia University’s Earth Institute. “The finance ministers were in shock, almost in panic this weekend,” he said on CNN’s… Continue»
What a vicious chain of events our politicians have set into motion. It just continues to worsen. It started out innocently enough. Oil prices were climbing. Our energy production was shifting to an ever greater extent to countries that are hostile to the U.S. So, Step 1 is to propose a solution: 1. Subsidize ethanol production to encourage biofuels and enhance energy security. However, subsidies didn’t do the trick. It was still too expensive to produce ethanol. People still chose gasoline derived from hostile sources over more expensive ethanol. What we really needed was Step 2. 2. Let’s mandate ethanol usage. At the point that the subsidy turns into a mandate, things change. Now, the fuel doesn’t have to be… Continue»
And the news is bad. First up, an issue that is shaping up to be a major battleground between states. Nate Hagens brought this issue up on yesterday’s API call, but it was part of the lost transcript: Ethanol Boom Saps Water Mike Adamson remembers when water wasn’t such a problem. As a kid growing up on his family’s cattle feedlot along the Colorado-Kansas border, “you could dig a post hole and see water runnin’ in the bottom,” he recalls. Today, Adamson is 48 and in charge of the family business, Adamson Brothers and Sons Feedlot, a holding ranch for cattle as they go to market. And the water, he says, is disappearing. “The lakes are gone. The wetlands are… Continue»
I know this is my second pessimistic post this week, but along with an energy crunch, I have been concerned about a food crunch. The whole ethanol love affair has had me worried for a long time about the impact on food supplies. My concern has been that as we diverted corn to ethanol, corn prices would go up (affecting food prices) but that also other crops would be affected. Some cropland would be shifted to corn, to take advantage of the artificial market created by the ethanol mandates, and this could cause acreage of other crops to fall short. And if you look at USDA Long Term Crop Projections, you will see that in fact, as corn prices climbed… Continue»