Food shortages are real

While it is easy to point fingers at the speculators for their role in the global run-up of food prices, they are speculating on real problems--starting with the fundamental madness of turning food crops into biofuels.

Stop the Madness!

Biofuels, Soaring Food Prices and Iowa

By ROBERT BRYCE   February 26, 2011

When the chairman of the world’s largest food company says that using food crops to make biofuels is “absolute madness,” sensible people should take heed.

Alas, President Obama, along with a Congress that is dominated by Big Ag interests, just doesn’t seem to care that Peter Brabeck, the chairman of the Swiss food giant, Nestle, made that very declaration last month. And that blithe ignorance of the madness of biofuels is resulting in some truly horrifying results. Here are the numbers: This year, the US corn ethanol sector will consume 40 percent of all US corn – that’s about 15 percent of global corn production or 5 percent of all global grain – in order to produce a volume of motor fuel with the energy equivalent of about 0.6 percent of global oil needs.

Congress not only lavishes subsidies on the corn ethanol scam, it has mandated the use of corn ethanol, and provided tariff protections to an industry that is helping push global food prices to all-time highs and shrink grain reserves at the very same time that global grain production is faltering and protests over food prices are commonplace.

The quantity of grain to be consumed this year for US ethanol production – 4.9 billion bushels – boggles the mind. That’s more than twice as much as all the corn produced in Brazil and more than six times as much as is grown in India. Put another way, that’s more corn than the output of the European Union, Mexico, Argentina, and India combined.

Despite these facts, last month, President Obama, in his State of the Union speech, said “we can break our dependence on oil with biofuels.” Meanwhile, the Iowa Caucus, the nation’s first presidential primary is now less than one year away. And Newt Gingrich, the former speaker of the US House, who's dearly hoping that he can be a viable candidate for the 2012 Republican presidential nomination, was recently in Iowa cravenly wooing the ethanol producers and slamming “big city” critics of the ethanol industry. Alas, there’s little reason to expect much bravery out of Gingrich’s fellow Republicans on Capitol Hill. Speaker of the House John Boehner recently told reporters not to expect cuts to the ethanol subsidies because they are “not in the discretionary spending pot.”

While Obama prevaricates and Congress dithers, ethanol boosters are once again claiming that their sector has negligible effect on grain prices. Instead, they blame surging grain prices on, well, everything but their industry. To be sure, bad weather in Russia and Australia has cut grain harvest in those countries. In addition, rising demand for grain in the developing world is affecting prices. more

Then there is the very real problem that around the world, more and more cropland is being taken out of production only to buried by suburban sprawl and strip malls.  Here in Minnesota, this has been especially tragic because much of the land lost to agriculture is some of the finest on earth.

From Clusterstock

The only way to offset such loss of cropland is to apply large quantities of fertilizers.  Since many fertilizers are made from petroleum feedstocks, the speculators in the oil markets have their role to play here as well.  Some fertilizers, such as potash, have their own markets that can be disrupted by the hot-money guys.

From Business Insider