Global Food Prices Jump To Record Level Because of Higher Corn Prices – or the alternate title: Cornholing the future
There’s lot of gloom and doom being pushed, trying to link food prices to climate change by the usual howlers. As shown above, food prices surged to record levels in February despite February wheat and rice prices being essentially flat. Yet, February corn prices are up significantly even with 2010 being the 3rd largest U.S. corn crop ever. Why? Well part of the reason is that our cars now have a mandated, growing and voracious appetite for corn based ethanol.
Dr. Roger Pielke Jr. writes:
When certain information proves challenging to entrenched political or ideological commitments it can be easy for policy makers to ignore, downplay or even dismiss that information. It is a common dynamic and knows no political boundaries. Global Dashboard catches the Obama Administration selectively explaining the causes for increasing world food prices:
“The increase in February mostly reflected further gains in international maize prices, driven by strong demand amid tightening supplies, while prices rose marginally in the case of wheat and fell slightly in the case of rice.”
“In other words, this is mainly about corn. And who’s the biggest corn exporter in the world? The United States…And where is 40% of US corn production going this year? Ethanol, for use in US car engines.”
So here we having wailing and gnashing of teeth by the usual suspects over global food prices, and they are using this as an example of the supposed “climate change drive food prices” link. Of course there isn’t any link in this case. It’s the corn stupid.
The simple solution: stop burning food for fuel, drill for more oil, work on alternate energy system that actually might work, like thorium based nuclear power.
h/t to C3 headlines
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First!
Cornholing the future… Heh.
Which American company grows the most corn in the U.S., and which American company gets the most in subsidies?
How much does that company spend in lobbying each year and who do they support politically?
….They quietly announced a number of years ago that they were converting at least 10% of their cropland to corn production, because it was more profitable….
You’ll hear the GloomerDoomers wailing about how climate change is forcing the price of food up, corn included. What I don’t understand is how you can, with any intelligence at all, justify putting food in your tank, when you can’t eat oil.
I’m drilling as fast as I can!
……..and aren’t they trying to raise it from 10% to 15% ethanol
When people start having problems with their older cars, any engine, they should sue.
Everyone raising corn is dancing to the bank, but then that was the whole idea in the first place………..
Yes, higher food prices are linked to, among other things, climate change, specifically to climate change policies — and the fear of climate change.
Even Al Gore figured this out.
I’m not a fan of ethanol, but you should know that there are several varieties of corn specific to the end use. The corn you get for dinner is not the same as the corn you feed to cattle or chickens, and there is a specific GM variety coming on the market that is tailored for ethanol. To proclaim that we are taking food out of the mouths of people by producing corn for ethanol is simplistic at best. If you wish to refine your claim that corn produced for ethanol uses up land that would otherwise grow corn for feed or people, then I’d be ok with that. But please realize the issue is far more complex than your headline would indicate.
Food for klunkers.
“The simple solution: stop burning food for fuel, drill for more oil, work on alternate energy system that actually might work, like thorium based nuclear power.”
~~~~~~~~~~~~~~~~~~~~~~~
Rational policy that, but then I am reminded of Keynes:
“There is nothing so disastrous as a rational investment policy in an irrational world.”
Sadly it is an irrational world when we have to deal with ideologically-driven politcians.
In Germany the consumers just brought a halt to this insanity: http://www.spiegel.de/international/germany/0,1518,749199,00.html
I was going to say the greens/alarmists/UCS and the rest were economically illiterate, now I am not so sure. It may be a genuine effort to kill as many people as possible.
Looking at the preliminary figures of excess deaths in the UK due the Winter any sane person would question where this is heading. Sorry no link to the deaths.
There’s a big problem. Farmers and businesses invested heavily in plants, facilities and machinery for this business. You just can’t stop it and leave them hanging in the wind. Either the oil for food continues, or the government bails them out (too!).
This mess can be blamed on Bush, and all the environmentalists who originally backed the idea.
If your headline was spelt correctly it would have more impact…
[Thanks, fixed. ~dbs]
Klimawandler,
Consumers can decide what they want, but in the end the government thinks it can veto consumers’s decisions and decide for them. Expect the German government not to back down.
@Curiousgeorge:
My kinfolk in the Midwest switched from growing corn for food to corn for ethanol over the last decade because that’s where the money is.
That’s not complex at all!
tw
Curiousgeorge says that we are not converting people food corn to ethanol since it is a different kind of corn.
Unfortunately, curiousgeorge, it is not quite that simple.
It may not be the same corn that people consume, but that is not the problem. It diverts labor, capital, land, water, fertilizer, etc., etc. from growing people corn and other people foods to growing ethanol and car fuel.
Slick Willy also recently said it’s a mistake. But the EPA isn’t interested in factual data.
Sadly, this boondoggle has co-opted some conservatives also. They don’t want to shut down the cash flow to their constituency.
Remove the 15% mandate and the subsidy. Ethanol would dry up overnight.
Curiousgeorge talks about corn types grown to purpose and it is true there are ethanol specific ears of corn. But the land it grows on does not know nor care the pedigree of the tasseled stalks it is producing or if a flatulent ruminant or a flatulent Buick is going to consume that corn. Fields used to grow corn for ethanol could be growing food. They cannot do both at the same time.
Curiousgeorge says:
March 5, 2011 at 3:38 pm
I’m not a fan of ethanol, but you should know that there are several varieties of corn specific to the end use. The corn you get for dinner is not the same as the corn you feed to cattle or chickens, and there is a specific GM variety coming on the market that is tailored for ethanol. To proclaim that we are taking food out of the mouths of people by producing corn for ethanol is simplistic at best. If you wish to refine your claim that corn produced for ethanol uses up land that would otherwise grow corn for feed or people, then I’d be ok with that. But please realize the issue is far more complex than your headline would indicate.
George corn is in everything. Corn Syrup is used in so many things I don’t know where to start, cornstarch is used in just about as many. Doritos, corn flakes, all sorts of other cereals. Corn meal, Tortillas, all things mexican. Not to mention animal feed for chickens, beef, goats, dog food, cat food, fish food.
Economically illiterate politicians who push this garbage apparently don’t read the peer-reviewed literature,
Ethanol Fuels: Energy Balance, Economics, and Environmental Impacts Are Negative
(Natural Resources Research, Volume 12, Number 2, pp. 127-134, June 2003)
– David Pimentel
“Several studies suggest that the $1.4 billion in government subsidies are encouraging the ethanol program without substantial benefits to the U.S. economy. Large ethanol industries and a few U.S. government agencies, such as the USDA, support the production of ethanol. Corn-farmers receive minimal profits. In the U.S. ethanol system, considerably more energy, including high-grade fossil fuel, is required to produce ethanol than is available in the energyethanol output. Specifically about 29% more energy is used to produce a gallon of ethanol than the energy in a gallon of ethanol. Fossil energy powers corn production and the fermentation/distillation processes. Increasing subsidized ethanol production will take more feed from livestock production, and is estimated to currently cost consumers an additional $1 billion per year. Ethanol production increases environmental degradation. Corn production causes more total soil erosion than any other crop. Also, corn production uses more insecticides, herbicides, and nitrogen fertilizers than any other crop. All these factors degrade the agricultural and natural environment and contribute to water pollution and air pollution. Increasing the cost of food and diverting human food resources to the costly inefficient production of ethanol fuel raise major ethical questions. These occur at a time when more than half of the world’s population is malnourished. The ethical priority for corn and other food crops should be for food and feed. Subsidized ethanol produced from U.S. corn is not a renewable energy source.
Food Versus Biofuels: Environmental and Economic Costs
(Human Ecology, Volume 37, Number 1, pp. 1-12, February 2009)
– David Pimentel et al.
“The rapidly growing world population and rising consumption of biofuels intensify demands for both food and biofuels. This exaggerates food and fuel shortages. The use of food crops such as corn grain to produce ethanol raises major nutritional and ethical concerns. Nearly 60% of humans in the world are currently malnourished, so the need for grains and other basic foods is critical. Growing crops for fuel squanders land, water and energy resources vital for the production of food for human consumption. Using corn for ethanol increases the price of US beef, chicken, pork, eggs, breads, cereals, and milk more than 10% to 30%. In addition, Jacques Diouf, Director General of the UN Food and Agriculture Organization, reports that using food grains to produce biofuels is already causing food shortages for the poor of the world. Growing crops for biofuel not only ignores the need to reduce fossil energy and land use, but exacerbates the problem of malnourishment worldwide. “
CouriousGeorge,
It’s not the type of corn, it’s ANY corn. It’s the acreage involved. If you are growing ethanol corn, you can’t grow sweet corn on the same ground. It’s crowding out other crops also.
Wheat prices have not been flat.
http://www.indexmundi.com/commodities/?commodity=wheat&months=120
http://www.indexmundi.com/commodities/?commodity=corn&months=120
“The simple solution: stop burning food for fuel, drill for more oil, work on alternate energy system that actually might work, like thorium based nuclear power.”
AMEN.
Our energy policy is a disgrace to our intelligence.
Other side benefits include:
Massive royality and lease sale payments to our Treasury. During the Bush Admin. Such payments to the treasury represented the largest source of Treasury Revenue after income taxes. Why has Obama cut off this huge source of Federal revenue by failing to sell leases and killing royalities? It is suicidal to kill an income source.
Jobs, Jobs, Jobs. A three letter word according to the VP.
Balance of Payments
Reduce oil prices
Reduce funding to unfriendly dictators (although very little of our oil comes from the middle east we do support Chavez)
The promise of alternative green fuels is a diversion from reality especially for liquid fuels.
“The corn you get for dinner is not the same as the corn you feed to cattle or chickens…”
And what kind of corn, pray tell, would starving people like to eat?
Boy this red herring nonsense gets old — the corn used for producing fuel ethanol (field corn) and is not “food for human consumption” it is an industrial crop like timber, alfalfa, cotton etc.
The “waste product” of ethanol production is high quality cattle feed, which is used to produce high quality protein in the form of meat. The only thing taken out of the corn used in ethanol production is the ferment-able sugars and starches, all the rest of the nutrient value is preserved and used as dried distillers grains and solids (DDGS) as animal feed, harvested for corn oil, or if in surplus and economically it can be burned as fuel to power the fuel ethanol brewing cycle. In fact the brewing process yeasts actually add to the food value of the DDGS, so you get more nutrients out than you put in as corn.
The real reason for the increased corn prices is speculators (commodity players) are bidding up the price of corn, anticipating increased demand for fuel ethanol in coming months to replace very expensive oil as mid east problems increase the uncertainty of supply for oil.
This is a predictable result of a sharp increase in any commodity price. Other commodities will also go up.
IT’s the COST of OIL Stupid!
The modern fuel ethanol industry grew up out of the oil shortages of the 1970’s because ethanol allowed them to stretch a limited supply of oil/gasoline. Fuel ethanol is a direct replacement for imported oil, and its percent of use goes up as costs of oil increase. That is a classic increase of demand for a substitute product when the item it replaces becomes cost prohibitive.
It is very simple economics, when one commodity becomes very expensive, any other commodity that depends on its use for production, or any viable replacement also increases in cost.
When high quality hard wood gets expensive and hard to get people switch to hardwood veneer products, same sort of substitution occurs with fuels.
Fuel ethanol is the most cost effective octane enhancement for gasoline blending, it allows them to use less crude oil to make a gallon of fuel, therefore as the price of oil goes up, so does demand for fuel ethanol to allow the blenders to meet minimum octane requirements at the lowest possible cost.
It is a safe bet that this years corn plantings will be going up substantially for the same reason, as increased fuel costs will improve profit margins on fuel ethanol.
The actual cost of the corn fraction of common food products is trivial, in a box of corn flakes the cost of the corn to make it is less than 10 cents, the real cost is in the packaging and shipping (oil) to get the product to the consumer.
Larry