Wednesday, February 07, 2007

Recent articles re: the food v. fuel question

The February 1st issue of The Economist had a short article on the impact of the rising price of a staple in the diet of many of Mexico's citizens--corn. As the article notes, maize is "eaten folded in tacos, fried in flautas, or rolled in enchiladas." A recent shortage of white maize (preferred over yellow maize for tortillas) caused a price jump in the price of tortillas. The jump, according to The Economist, was caused by the growing popularity of subsidized ethanol in the U.S., which pushed industrial users of yellow corn in Mexico to buy white maize, instead.

Increasing demand for corn for ethanol was the subject of a thoughtful article, Corn: Fuel or food? published in the Minneapolis Star Tribune over the weekend. Star Tribune reporter Mike Meyers reports that "[f]ull fuel tanks could mean many more empty bellies within the next two decades." Meyers discusses a new report by University of Minnesota economists Ford Runge and Benjamin Senauer.

Meyers points out that it's not just consumers of corn tortillas who will be impacted by the increase in staple food prices, but increasing corn prices will also impact the price of any food product that uses corn (check out the ingredient list on some foods in your pantry, turns out corn is almost everywhere you look). The price of meat, eggs, and even dairy will be impacted by higher corn prices.

The latest in ethanol talk, at least among politicians, is that switchgrass will be a better alternative than corn, so perhaps Runge and Senauer's predictions will not come to pass. The technology for using switchgrass, however, is a few years away. In the meantime, politicians in the U.S. might take note of the headache that the spike in tortilla prices caused Mexcian President Felipe Calderon.