Grocery shopping this morning put me in quite a funk. I shop weekly and I repeatedly had to pick my jaw up off the floor as I noted the prices of the food I was purchasing to feed my family this week. We don’t eat very fancy…we don’t eat processed foods…I am very careful about the things I choose to buy for my family.
I’ve been expecting what I saw in the grocery store this morning. The reading I’ve been doing lately has helped me understand what is happening and what is going to happen. It didn’t make it much easier to stomach, though.
What follows is an abbreviated version of an article I recently wrote:
We are about to witness and experience the greatest sustained rise in grain prices seen in the last 30 years. This rise will include wheat, rice, and maize, these three comprising over 90 % of all grains cultivated on the planet. Let?s do some digging to figure out what is causing this sharp increase.
The Bush Administration?s ?20 in 10? program is at the root of the problem. The plan is to cut US gas consumption by 20% by the year 2010. The official PR tells us that this will reduce US dependency on foreign oil producers and will reduce greenhouse gas emissions. Both of these claims are false.
The foundation of this plan is a large taxpayer-funded expansion of the use of biofuel (ethanol) for transportation. This plan requires the production of 35 billion gallons of ethanol per year by the year 2017. Congress has already mandated that corn ethanol must rise from 4 billion gallons in 2006 to 7.5 billion in 2012. To guarantee this, agri-Giants like David Rockefeller are providing generous incentives to farmers choosing to grow corn for ethanol rather than food. Ethanol producers receive a subsidy of 51 cents per gallon of ethanol that is provided to an oil company.
The transition from farmland being used to grow food to farmland being used to grow biofuels is being dubbed a major new growth industry. Two years ago, US farmland devoted to biofuel crops increased by 48%. Due to the attractive incentives set in place by Congress, none of this farmland has been replaced with food crops. Since 2001 alone, maize grown to produce ethanol in the US has increased by 300% and this will continue to rise. Food prices are soaring as corn and cereal grain prices are rising due to the Congress driven demand for corn to make biofuels.
More than 50% of corn grown in Iowa and South Dakota went to ethanol distilleries in 2006. Farmers desperate for income after years of low corn prices are finding it hard to resist adopting the modern agribusiness practice of abandoning crop rotation to grow only soybeans and corn. This has directly impacted both soil erosion and herbicide/pesticide use. Currently in the US, over 40% of all herbicides are applied to corn.
The US has been developing biofuels for over 30 years. It is becoming more and more apparent that the same groups who brought us oil inflation are now creating food inflation. This is the same cast of characters who gave us the Iraq War, the fight over oil control, GM seeds, and Terminator seeds. The same groups who raised awareness about the ?problem of over-population??these are the same groups who are now behind the world transition from food grains to biofuel grains.
The belief that we can replace our oil dependency with biofuels is becoming the most significant threat to our planet?s food supply since the creation of Genetically Modified crops. A direct result of this biofuel transition is that the world?s reserve stocks of grain have been greatly reduced over the last 7-8 years. Reserve stocks of all grains fell to an unprecedented 57 days of consumption in 2006. This resulted in world grain prices soaring 100% over the last 18 months. We have experienced a 300% rise in oil prices since the end of 2000.
The new demand for biofuel is directly linked to our plummeting grain reserve and soaring food prices. Biofuel demand is also connecting food prices to oil prices. The end result is that people are directly competing with cars for the same grains. A new era has emerged where oil and food are interchangeable commodities because just about any crop can be converted into fuel. The price of oil is now starting to set the price of food.
