The Economist reports on food price inflation and food diversion:
“Ethanol is the dominant reason for this year’s increase in grain prices. It accounts for the rise in the price of maize because the federal government has in practice waded into the market to mop up about one-third of America’s corn harvest. A big expansion of the ethanol program in 2005 explains why maize prices started rising in the first place.
“Ethanol accounts for some of the rise in the prices of other crops and foods too. Partly this is because maize is fed to animals, which are now more expensive to rear. Partly it is because America’s farmers, eager to take advantage of the biofuels bonanza, went all out to produce maize this year, planting it on land previously devoted to wheat and soyabeans.
“This year America’s maize harvest will be a jaw-dropping 335m tonnes, beating last year’s by more than a quarter. The increase has been achieved partly at the expense of other food crops.
“In other words, the demands of America’s ethanol program alone account for over half the world’s unmet need for cereals.”
Is there one, count ’em, one successful government program recently? It seems too easy merely to think that cash for corn is profiting only the Whitehouse agribusiness cronies.
Got No Milk?
There’s also a global milk shortage and rapidly increasing prices. The Food and Agriculture Organization shows international dairy prices increased 46% in only six months, with milk powder prices increasing even faster.
“Oil is not the only product on the market for which record prices have to be paid. With the increased dairy demand in (primarily) Asia and the rising costs for animal feed, milk is also trading at record highs.
“In some countries the beer is more affordable than milk, ” says AllAboutFeed.