Comment & Debate
Robert Zubrin. “In defense of biofuels”. The New Atlantis. Spring 2008 – (Food price shocks are In fact, there are several culprits. One is low farm productivity in some parts of the world. Regional droughts is another. Sometimes there is a confluence of factors: Some critics have foolishly claimed that recent food riots in Haiti could be linked to the U.S. ethanol mandate even though those riots were about rice, which the U.S. doesn’t use to make ethanol, and were largely caused by unwise trade policies and a drought in Australia that, according to the St. Petersburg Times, “has seen [its] rice production fall by a stunning 98 percent.”
But the two primary reasons for higher food prices are, first, higher demand, and second, higher fuel prices. The increased global demand for food ought to be seen as a very good thing: it represents hundreds of millions of people, especially in China and India, rising out of poverty and moving to more calorie-rich diets. Escalating fuel prices, however, are not good news: they drive up the cost of everything we eat. For example, consider the $3 box of cornflakes you might see in your grocery store. Farm commodity prices basically have a trivial effect on its price. A bushel of corn contains 56 pounds of grain, so at the current “very high” commodity price of $5 per bushel, a pound of corn costs 9 cents. So the 16 ounces of corn in that cereal box cost a total of 9 cents when bought from the farmer. But when the price of oil goes up, that increases the cost of production, transport, wages, and packaging—all driving up the retail cost of food.