The Next Global Crisis: Food Shortages

With prices for rice, wheat, and corn soaring, food-related unrest has broken out in places such as Haiti, Indonesia, and Afghanistan. Several countries have blocked the export of grain. There is even talk that governments could fall if they cannot bring food costs down.

One factor being blamed for the price hikes is the use of government subsidies to promote the use of corn for ethanol production. An estimated 30% of America’s corn crop now goes to fuel, not food.

“I don’t think anybody knows precisely how much ethanol contributes to the run-up in food prices, but the contribution is clearly substantial,” a professor of applied economics and law at the University of Minnesota, C. Ford Runge, said. A study by a Washington think tank, the International Food Policy Research Institute, indicated that between a quarter and a third of the recent hike in commodities prices is attributable to biofuels.

Once again, government actions in one area have distorted markets and have unintended and far reaching consequences. In a quest to go "green," governments including the US, pushed for biofuels - taking food staples like corn and using them for food instead.

It is a colossal folly of epic proportions to do such a thing. Biofuels can be viable, if you're talking about waste biomass biofuels - products like used vegetable oil, and not corn which is a base product for thousands of food products and billions of people around the world.

The market distortions due to subsidies and tariffs has sent prices for corn products and other staples through the roof. Those least capable of affording the price increases are most affected.

The environmentalists are concerned that the food shortages might curtail the green movement. That's a good thing for people who are concerned with making sure that people don't go hungry. So much of what the environmentalists have said and policies implemented have been based on junk science that the harm done is tremendous.

It's one thing to call for cleaner air, but it's quite another to demand that we use food for fuel to curtail carbon dioxide emissions - a natural byproduct of human respiration that makes up a fraction of 1% of the atmosphere and may be only a lagging indicator of global climate change, and not a predictor or cause.