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Ethanol subsidies and food scarcity

Early 2007 saw the beginning of strife and hunger induced unrest throughout the world due to rapidly appreciating grain prices . Rising corn prices in Mexico, soy beans in Indonesia, pasta in Italy, bread and wheat -based staples in Pakistan and other countries have bred demonstrations and other signs of social unrest for the first time, because of policy decisions based on mitigating increased petroleum prices. With the price of corn now hovering around five dollars a bushel , the world has seen the price of most of their staple grains increase in order to fill the void left by corn and other crops ear-marked for petro-fuel substitution. When you add in a gradual world-wide shift into producing more and more crops for both ethanol and bio-diesel you have a situation where large swaths of third-world and developing nation populations , are forced to make hard and hungry decisions about where to put scant income. With 450 lbs. of corn required to produce 25 gallons of ethanol it's not hard to see how America's thirst for ethanol and a small taste of energy independence is, and will, mean hunger for a large part of the developing world that depend on cheap grain exports. Already two of the worlds largest wheat producers have effectively banned exports while Vietnam has stopped selling rice abroad. Even here at home, where feedstock price increases are softened by adjustments in the marketing and production costs, food price inflation has seen increases of between 12% for whole wheat bread, and 36% for eggs , in just the last year. These shortages are only projected to get worse as America's plans for an additional 62 distilleries reach fruition over the next 1 to 2 years. When these additional distilleries start production , we may see heretofore unheard of food prices since it is estimated that these additional processors will consume an additional 30 to 40 million tons of corn over and above their current consumption of 81 million tons. This translates into almost 30% of all the corn harvested in the U.S. during 2007.Even if all the corn grown in America were destined for ethanol production, it would still scarcely supply maybe 20% of our current needs for automotive fuel. We would still be dependent on foreign sources for petroleum while driving even more American citizens into desperate choices between gasoline and food. And all this assumes there will be adequate grain stocks to go around, without diversion into ethanol production. Entering this year the worlds grain reserves have fallen once again to now stand at 54 days worth of consumption, the lowest ever. With millions more mouths to feed and millions of acres of farmland destined to turn back to soybeans after a year of nitrogen depleting corn farming, the prospects of stabilized prices for not only corn, but the hundreds of foods made from corn, appear slim. The showdown between the ethanol industries federally subsidized corn farming, and Americas grocery bill, may be beginning.

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