Tuesday, April 15, 2008

Food prices and the use of corn

The rise in food prices is finally garnering serious attention from the media and from world governments. The latest NY Times piece has this precious quote from Senator Charles Grassley of Iowa:

“You make ethanol out of corn,” he said. “I bet if I set a bushel of corn in front of any of those delegates, not one of them would eat it.”

Never mind the fact that a bushel is more than 25 kg of corn, Sen. Grassley (in claiming that the diversion of corn for ethanol is not affecting food prices) rather accidentally describes the exact problem. We don't eat the corn. In the U.S., the majority of the subsidized crops corn and soybeans (~75% in our most recent look at the economic data) are used for animal feed. And it is the rise in demand for meat, together with biofuel demand, high oil prices and droughts overseas, that is driving up food prices.

1 comment:

John Mashey said...

Well, to be fair, I wouldn't eat it (directly) either, given that it's likely field corn, not sweet corn.

Of course, High Fructose Corn Syrup takes work to avoid - The Omnivore's Dilemma has a nice commentary on why we're "Corn people".
As for prices, don't forget fertlizer, i.e., in some cases, natural gas.

Over the longer term, one would hope that weird ag subsidies will lessen, and the lower inputs required for things like switchgrass or miscanthus will put them ahead of corn for any biofuel applications. Less overuse of nitrogen fertilizer is good anyway (runoff), but in any case, it's going to get very expensive.