Soaring Food Prices

[Babaloo]

Originally Posted by farmgirl

I can't understand why they would not be seeding crops??

they are probably being paid not to farm it
the government works in mysterious ways

[Jimmy-James]

All this about ethanol being the source of all our price increases is a bit of a paper tiger in my opinion. Corn has been in and around the $3.50 a bushel neighborhood for a while, higher than recent years? Yes. But nowhere near the $5.00 a bushel range we saw in 1996 and prices didn't increase as much then.

Ethanol is not the answer to America's energy issues, it's only a piece of the puzzle. There is no magic bullet that will take care of our energy problems, but at least this is a step in the right direction.

Also, the ethanol industry has been saying for a while that technology has made current ethanol production an energy positive equation- about 30%, not a energy negative situation at that SF Chronicle erroneously reports.

I think the rising cost of gas/oil is more problematic when related to price increases, not corn prices as much. Also, recently the USDA said ethanol was not as much to blame as it has been...

USDA: ETHANOL HAVING ONLY SMALL IMPACT ON FOOD PRICES
On a day when the U.S. ethanol and refiner trade associations traded
accusations over whether ethanol's to blame for the rising cost of
corn-based products, U.S. Department of Agriculture (USDA) Acting Secretary Chuck Conner defended the fuel, saying ethanol "has been assigned more than its fair share of blame for what has been happening in our grocery aisles."

"Clearly ethanol demand is having an impact. We cannot deny that,"
Conner said earlier today at a Consumer Federation of America conference. But agriculture commodities only comprise a small percentage of the cost of
foods and the price of oil plays a much larger role, he said. Between 2003 and 2006, oil prices more than doubled, Conner said, and they
continue to climb, to new highs around $84/bbl. That has caused prices
at the pump over the last two and a half years to jump by about $1/gal, he
added.

"If you step back a bit and simply take a look at that picture,
Americans consume about 140 billion gallons of gasoline each year, so a dollar a gallon price increase is about a $140 billion impact. We have about 7 billion
bushels of corn each year that we use for food and feed purposes. So if we raise the price of corn by about $1.00, low and behold by my simple math, that's a $7 billion impact on consumer spending. So the order of magnitude here really needs to be kept in context of the impact of rising energy prices vs. the impact of rising corn prices," Conner noted.

There are forecasts that conclude that higher ethanol usage will lead
to higher prices for corn and feed, but they don't take into account the
ability for farmers to add more acreage and boost yields, Conner said. USDA
anticipates a record-breaking 13.3 billion bushel corn harvest this
fall.

In unrelated news, Conner announced late this afternoon that USDA
would "not offer penalty-free early releases from Conservation Reserve
Program (CRP) contracts at this time." Last week, Conner said the agency would soon decide on whether to return idle cropland from the CRP back into
rotation for the 2008 crop year.

Under USDA, the CRP pays farmers to set aside highly erodible
cropland or other environmentally sensitive acreage and convert to native grasses. Currently, 36.7 million acres have been set aside in the CRP.
To help stave off future pressure on corn prices and supplies, some
ethanol supporters have suggested returning some idle land from the CRP to corn production. But Conner said today that wasn't necessary. "While this
year's global wheat market remains very tight, corn production is expected to
be record-high, and today's grain stocks report indicated higher than
expected stocks for corn and soybeans at the start of the 2007/08 crop year. In addition, more than 2 million CRP acres expire under existing contracts this weekend, on Sept. 30, 2007," Conner noted. But he plans to closely monitor the market and "will not hesitate in the future to make adjustments" if necessary.

[MMandm]

Originally Posted by roni

As Prices Soar, U.S. Food Aid Buys Less

By CELIA W. DUGGER
Published: September 29, 2007

Soaring food prices, driven in part by demand for ethanol made from corn, have helped slash the amount of food aid the government buys to its lowest level in a decade, possibly resulting in more hungry people around the world this year.

The United States, the world’s dominant donor, has purchased less than half the amount of food aid this year that it did in 2000, according to new data from the Department of Agriculture.

Whole article here

My comment and question:

These soaring food prices not only affect international aid programs, but will also affect the ability of billions to provide a nutrionally adequate diet for themselves and their families

Mexico has had some unrest reported in the past year over the cost of tortillas. It is possible that continued increases in food costs could threaten the stability of governments.

Are there solutions?

Here's a great thread on the rise of food prices with a whole bunch of comments:

The Oil Drum: Europe | A Note From our Milkman

The only way to stop the insane corn ethanol boom is to essentially voluntarily reduce your own "carbon footprint" by reducing demand for liquid fossil fuel products.

Corn ethanol not only drives food products to the production of liquid fuel, it uses large amounts of natural gas-based fertilizers, is extremely destructive to topsoil, and uses MASSIVE amounts of water, usually drawn from non-renewable aquifers.

The process is a net energy loser (i.e. it requires more fuel inputs than it creates) and wouldn't be remotely profitable without large government subsidies.

Cellulostic ethanol has some promise, but the scalability is an issue.

Yessirree, the US sure has its hands on the fossil fuel/global warming problem. Hey, at least Conagra and Archer-Daniels-Midland will make a bunch of money!!

Ugh!