Saturday, January 23, 2010

Eat or Drive-Ethanol Production Raises Food Prices 75%

An article in the Guardian reports that the US production of corn for ethanol helped raise food prices worldwide by 75% and pushed over one billion people into chronic hunger and malnutrition.

The report says that one quarter of all corn and other crops grown in the US is refined into ethanol and blended with gasoline. My opinion is that ethanol is being used to deflate the price of gasoline in the US, which would otherwise be much higher due to stagnating oil production.

"According to [Lester] Brown, the growing demand for US ethanol derived from grains helped to push world grain prices to record highs between late 2006 and 2008. In 2008, the Guardian revealed a secret World Bank report that concluded that the drive for biofuels by American and European governments had pushed up food prices by 75%, in stark contrast to US claims that prices had risen only 2-3% as a result.

Since then, the number of hungry people in the world has increased to over 1 billion people, according to the UN's World Food programme.

"Continuing to divert more food to fuel, as is now mandated by the US federal government in its renewable fuel standard, will likely only reinforce the disturbing rise in world hunger. By subsidising the production of ethanol to the tune of some $6bn each year, US taxpayers are in effect subsidising rising food bills at home and around the world," said Brown."

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