Food cost studies compare impact of corn vs. energy price increases
There sure is alot of hang-wringing about biofuels these days. The lastest issue involves concern that the demand for corn will cause food prices to increase - disproportionately affecting the nation's poor and, by extension, the underdeveloped countries in the world.
Good news - the price of corn has dropped! According to recent data, corn prices haven't been this low since the end of 2006 (see chart below courtesy of a recent article at GoG2G Blog). 
It is always dangerous to extrapolate trends based on short duration spikes or valleys - particularly in something as variable as corn futures.
But that isn't even what is so interesting about the public outcry. What seems to have gone unnoticed in the press is that the price of gasoline going up has also had an impact on food prices. Compared to the relatively isolated corn price impacts, the energy price increases have a pandemic effect that impacts all food prices for two reasons - most crops are cultivated with petroleum-based fertilizers and all food is transported multiple times between the source and consumer.
BioPact has unearthed two studies that detail findings that support this argument:
John M. Urbanchuk, The Relative Impact of Corn and Energy Prices in the Grocery Aisle [*.pdf], June 14, 2007
The Renewable Fuels Association: Energy Prices, Not Corn, Chief Reason for Rising Food Prices, Study Finds - June 14, 2007.
In short, concern about the plight of underdeveloped nations and the world's poor is a reason to support fuel diversification and decentralization efforts, not hamstring them.
technorati BIOstock, corn, agriculture
3 comments:
///In short, concern about the plight of underdeveloped nations and the world's poor is a reason to support fuel diversification and decentralization efforts, not hamstring them.///
True, but *only if* biofuels are considerably less costly than petroleum products. That's a tall order. And only Brazil succeeds on this point.
"Less costly" in terms of carbon consequences or money?
Most of the costs we attribute to fuels do not include proper consideration of the social consequences of using that fuel. If we taxed fuels based on these social (not to mention military) costs you would find renewable fuels much more attractive financially.
Part of the renewable energy paradigm shift involves establishing carbon credits that account for these "social costs" - global warming, pollution, etc.
True, but only if bio-fuels are considerably less costly than petroleum products.
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