Smith Faculty Opinion Article
The 30 Seconds Outlook
May 1, 2011
“Combined with agriculture’s rising energy intensity, bio-fuels
production has also increased the correlation between food and oil prices
over the last decade.”
- Carnegie Endowment, Seeking Alpha, April 24, 2011
Food prices are at all time highs globally. The inflationary impact has
severe consequences for poverty stricken people in China and India. And higher
gas and other prices are impacting the well being of low-income families in the
U.S.
Several factors have increased food prices beyond 2007-2008, including export
controls, use of corn in bio-fuels production, and poor harvests. The prices of
wheat have surpassed their 2008 peaks. But, rice prices have provided a bit of
less bad news.
Since June 2010, the food price index is up 37%, rice 31%, soybeans 42%,
wheat 82%, and maize 90%. Improvements in the efficiency of global food markets
are essential. Trade restrictions remain the primary problem. More research is
also needed to increase crop yields and to reduce losses from insects.
Bio-fuels take 40% of the domestic corn crop, which for a fuel that is not a
solution to our energy problems is nonsense. A change in government policy is
required.
John A. Haslem
