UN food summit concerned about increasing cost of food
An article at Marketwatch.com written by Moming Zhou states that Biofuels are to blame for the increase in the cost of food prices world wide. At least that is the argument at the UN food summit in Rome anyway. On the surface this would make a lot of sense given the typical supply and demand theory that we all know and love.
As more and more people are born onto this earth, there becomes a greater and greater demand for food. If food production cannot keep up with demand because some of it is going towards the production of biofuels, then prices will naturally rise. “The U.N. said poor nations are expected to pay 40% more this year to feed their people than they did a year ago, and about 860 million people will be left without adequate food this year.” Statistics show that the usage of food for crops is not headed for a slowdown any time soon. According to the US Department of Agriculture, “corn for ethanol production is expected to reach 4 billion bushels next year, up more than 30% from this year and accounting for nearly 40% of domestic corn consumption.”
Can this massive run up in prices be fully attributed to the production of biofuels though? Major biofuel producing countries like the United States and Brazil don’t necessarily agree. The US admits that “biofuels are to account for a portion of the food-price inflation,” but “the driving factor is energy and increased consumption.” This seems to make sense because of the farming methods that we use. Large tractors and combines surely can’t be very fuel efficient. Given the price of energy these days it is easy to see why prices are rising. Brazil produces ethanol from sugarcane. Brazil also makes a valid argument for why they as well are not to be blamed. Brazilian President Luis Inacio Lula da Silva argues that “sugarcane isn’t a food staple and the sugarcane crop for ethanol production only accounts for 1% of the country’s arable land.”
You can read the entirety of this article here.
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