If you read just one thing from the latest issue of The American Conservative, skip my article and go for Jim Webb’s must-read book excerpt on our history of failed intervention in the Middle East (sadly not available online, though Larison quotes a bit of it here). Once you’re done with that, though, head straight for Tim Carney’s piece on the awfulness of corn ethanol. Here’s a quote to whet your appetite:
The economics are simple: when corn is being used for fuel and farm fields are no longer producing food or feed, the price of food and feed goes up. The USDA’s National Agricultural Statistics Service finds that farmers received $5.15 for a bushel of corn in May, up from an already high $3.49 a year ago. Corn futures, trading near $2.50 on the Chicago Board of Trade throughout 2006, climbed to almost $7 this past month.
And because farmers are growing corn instead of other crops and selling corn as fuel instead of as cattle feed, the prices of other crops and animal products have been affected as well. Consumer Price Index figures from April (the most recent month for which data is available) show soaring prices among many staples. Bread is up to $1.37 per pound, a 32 percent increase from March 2006, just before the ethanol mandate went into effect. Eggs and milk are also up for the same period, 59 and 20 percent respectively. Ground chuck has climbed 10 percent, following an 18 percent bump from 2003 to 2006. Beer prices are climbing, too, spurred in part by higher costs for energy, bottling, and water, but price spikes in the agricultural elements of beer are the big drivers—barley is up 87 percent since 2006, while hops have more than tripled.
These rising prices hit consumers in obvious ways, but they can also ruin small businesses. Higher ingredient costs may cut into Budweiser’s bottom line, causing a 1.4 percent drop in profits. But for smaller microbreweries, ones with narrower profit margins, continued increases in ingredient prices could be disastrous. In Mexico, family-operated tortilla stands have had to hike their prices, so the poor clientele are switching to cheaper, mass-produced foods like Cup-a-Noodles.
As Tim goes on to point out, and as I have remarked before, this is one of those very, very few cases where Barack Obama is clearly in the wrong even while – get this! – John McCain actually gets things right. Such a point of divergence is, of course, insufficient reason to vote Republican this year (there is no reason sufficient to do that), but it does seem to me to be good enough to rule out voting for the other panderer, too. That Tim’s terrific article was published just as the World Bank issued a report (with a similar judgment set to be released today by the British government) claiming that demand for biofuels has increased global food prices by 75% only seems fitting; Wired’s Brandon Keim has promised to ask Sens. McCain and Obama whether this will affect their biofuel policies, but it is hard to imagine that it will make for any change of the believable sort. (We’ve got to achieve “energy independence”, you know?) Anyway, give Tim’s article a read when you have the chance, and know frustration. If the prices of beer and hamburger meat really are up, though, anticipate an uprising once the word gets out.
P.S. In related news, Matt Yglesias explains why corn ethanol is so damnedly inefficient, and Nathan Origer recounts his own experience with the biofuel racket.
Filed under: economics, energy, environment, food
[...] like obesity, and of course Obama’s professed care for Midwestern farmers has already taken destructive turns – but I should say that the idea of press conferences being held beside the official White House [...]
[...] as I (and numerous others, including John) have, laments the destructive ways intrinsic in agri-business; however, he particularly strikes a [...]