Nick Palmer wrote:
I think it was Steven who wrote about the "sophistry" of the argument
about why food prices were rising (due to the diversion of corn
production into making ethanol biofuel). In today's technology review
http://www.technologyreview.com/Energy/20641/ they are looking at the
problems that the American rush to ethanol has caused. It appears as
if only one third of the price rise is due to this however...
<<Some analysts, such as C. Ford Runge, a professor of applied
economics and law at the University of Minnesota, say that the use of
corn for fuel rather than food could account for about one-third of
the rise in prices worldwide. The other two-thirds is split between
the effects of weather and increases in demand, he says. (Runge
presents his argument in "How Biofuels Could Starve the Poor," >>
Interesting. From what I'd read elsewhere I would have expected that
the main factor was the rise in the price of oil. I wonder about his
claim that the big effects are weather and demand -- or perhaps he's
attributing the oil price rise to rising "demand" as well?
In any case, 1/3 of the increase is still a big issue. Look again at
the price of rice: Up 147% in a year, according to the Wall Street
Journal. If 1/3 of that rise is due to diversion of arable land to make
biofuel, then biofuel production, alone, is responsible for a 49%
increase in the price of rice over the past year. That extra 49% is a
major problem for people who already can't afford enough food.
The statement about the weather is interesting, as weather and biofuel
production would both have the same effect, which is to decrease world
grain production. I ran across a note in LeMonde the other day which
bears on this. It seems that, during the past couple years, world
cereal production has actually **DROPPED** (while world population has
continued to increase, of course):
La FAO relève également une légère baisse de la production céréalière
mondiale. Après avoir atteint un pic en 2004, celle-ci a baissé
respectivement de 1 % et 2 % en 2005 et 2006. La production des huit
principaux pays exportateurs de céréales, qui assurent près de la
moitié du volume mondial, a chuté de 4 % et 7 % sur la même période.
Rough translation:
" The FAO (Food and Agriculture Organization of the U.N.) notes that
there has been a slight drop in cereal production worldwide. After
reaching a peak in 2004, it has dropped by 1% and 2% in 2005 and 2006,
respectively. The production of the eight principle cereal exporting
countries, which provide nearly half the world volume, has fallen
between 4% and 7% during the same period."
So, food apparently isn't *just* getting more expensive, as one might
expect if a jump in the price of a raw material (oil) were solely to
blame -- it's getting scarcer, as well.
