The global economy is getting back on its feet, but so too is an old enemy: food inflation. The United Nations benchmark index hit a record high last month, raising fears of shortages and higher prices that will hit poor countries hardest. So why is the United States, one of the world’s biggest agricultural exporters, devoting more and more of its corn crop to ethanol?
This is increasing even as global food supply is struggling to meet rising demand. U.S. farmers account for about 39 per cent of global corn production and about 16 per cent of that crop is exported, so U.S. corn stocks can influence the world price. Chicago Board of Trade corn futures recently hit 30-month highs of $6.67 a bushel, up from $4 a bushel a year ago, says the Wall Street Journal.
Source: Amber Waves of Ethanol, Wall Street Journal, January 22, 2011.
For text: http://online.wsj.com/article/SB10001424052748703396604576088010481315914.html
For more on Energy Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=22
First published by the National Center for Policy Analysis, United States
FMF Policy Bulletin/ 01 February 2011
