Corn and ethanol subsidy exacerbating world hunger?
BIOFUELS BLUNDER: Massive Diversion of U.S. Grain to Fuel Cars is Raising World Food Prices, Risking Political Instability
Briefing before U.S. Senate Committee on Environment and Public Works, Senator Barbara Boxer (D-CA), Chair, June 13, 2007
Lester R. Brown
The escalating share of the U.S. grain harvest going to ethanol distilleries is driving up food prices worldwide. Investment in fuel ethanol distilleries has soared since gasoline prices jumped at the end of 2005. Once completed, distilleries now under construction could double U.S. ethanol output, turning nearly 30 percent of next year's U.S. grain harvest into fuel for automobiles. This unprecedented diversion of the world's leading grain crop to the production of fuel will affect food prices everywhere, risking political instability.
The U.S. corn crop, accounting for 40 percent of the global harvest and supplying nearly 70 percent of the world's corn imports, looms large in the world food economy. Annual U.S. corn exports of some 55 million tons account for nearly one fourth of world grain exports. The corn harvest of Iowa alone exceeds the entire grain harvest of Canada. Substantially reducing this export flow would send shock waves throughout the world economy.
In six of the last seven years, total world grain production has fallen short of use. As a result, world carryover stocks of grain have been drawn down to 57 days of consumption, the lowest level in 34 years. (See data.) The last time they were this low wheat and rice prices doubled.
Already corn prices have doubled over the last year, wheat futures are trading at their highest level in 10 years, and rice prices are rising. Soybean prices are up by half. If the United States were to suffer intense heat and severe drought this summer in the Corn Belt, rising grain prices could quickly take the world into uncharted territory.
(More here.)
Briefing before U.S. Senate Committee on Environment and Public Works, Senator Barbara Boxer (D-CA), Chair, June 13, 2007
Lester R. Brown
The escalating share of the U.S. grain harvest going to ethanol distilleries is driving up food prices worldwide. Investment in fuel ethanol distilleries has soared since gasoline prices jumped at the end of 2005. Once completed, distilleries now under construction could double U.S. ethanol output, turning nearly 30 percent of next year's U.S. grain harvest into fuel for automobiles. This unprecedented diversion of the world's leading grain crop to the production of fuel will affect food prices everywhere, risking political instability.
The U.S. corn crop, accounting for 40 percent of the global harvest and supplying nearly 70 percent of the world's corn imports, looms large in the world food economy. Annual U.S. corn exports of some 55 million tons account for nearly one fourth of world grain exports. The corn harvest of Iowa alone exceeds the entire grain harvest of Canada. Substantially reducing this export flow would send shock waves throughout the world economy.
In six of the last seven years, total world grain production has fallen short of use. As a result, world carryover stocks of grain have been drawn down to 57 days of consumption, the lowest level in 34 years. (See data.) The last time they were this low wheat and rice prices doubled.
Already corn prices have doubled over the last year, wheat futures are trading at their highest level in 10 years, and rice prices are rising. Soybean prices are up by half. If the United States were to suffer intense heat and severe drought this summer in the Corn Belt, rising grain prices could quickly take the world into uncharted territory.
(More here.)
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2 Comments:
Maybe we need to tell the environmentalists to stick it and start drilling for oil and gas on our own soil. Why should any of us have to pay $5 for a gallon of milk because we have made so many domestic sources of energy off-limits? But, we shouldn't be suprised by these developments. Liberal myopia on myriad issues results in skyrocketing costs.
RECOMMENDED READING :
Daniel Gross July 20th article on the Ethanol Backlash citing Environmentalists, Economists, and Poverty Activists who are turning against corn fuel.
What I like about the article is that it points out consequences, provides some sources but then concludes that we do not know if these concerns are valid.
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