Commodity prices are rising in line with ethanol demands

Interdependencies between nations keep money flowing into the coffers of those that, at an international level, get to orchestrate it all, but it means vulnerability for the rest of us.

Concerns over 'energy security' may soon give way to more critical food security problems - in fact, the former is creating the latter.

Retail food prices are heading for their biggest annual increase in as much as 30 years, raising fears that the world faces an unprecedented period of food price inflation.

Prices have soared as the expanding biofuels industry, climate change and the growing prosperity of nations such as India and China push up the costs of farm commodities including wheat, corn, milk and oils. - Financial Times

Consumers will have to pay more for food in coming years as demand from biofuel manufacturers has pushed up the prices of corn and other grains for the long term, a senior economist of the US government has warned.

Keith Collins, chief economist at the US department of agriculture, also said grain prices could be very volatile this year because of low global grain stockpiles.

"In the past when we have seen grain prices spike, they have always fallen back because the spike was normally the result of a supply shock, such as a bad harvest, but this time it is a demand shock, which will keep prices higher,".... - Financial Times

Last year's tortilla protests may be just the beginning:

Mexican farmers are setting ablaze fields of blue agave, the cactus-like plant used to make the fiery spirit tequila, and resowing the land with corn as soaring U.S. ethanol demand pushes up prices.

... "Those growers are going after what pays best now," said Ismael Vicente Ramirez, head of agriculture at Mexico's Tequila Regulatory Council - Reuters

Most other countries are seeing food prices rise as well. Since the beginning of 2007, U.S. food prices have climbed 6.7 percent, seasonally adjusted, compared to 2.1 percent for all of 2006, according to the Bureau of Labor Statistics. If this trajectory continues through the rest of the year, it would be the largest annual increase since 1980, the FT notes. And the United Kingdom’s consumer price index indicated annual food price inflation of 6 percent in April, compared with 2.8 percent overall inflation. - Worldwatch

 

Further Reading:

• Biofuels - It's Getting Annoying Now
• Global rush to energy crops threatens to bring food shortages and increase poverty, says UN