Wednesday, December 12, 2007

"Food vs. Fuel"

Check out this Washington Post piece.

To be sure, some farmers in these countries benefit from higher prices. But many poor countries -- including most in sub-Saharan Africa -- are net grain importers, says the International Food Policy Research Institute, a Washington-based think tank. In some of these countries, the poorest of the poor spend 70 percent or more of their budgets on food. About a third of the population of sub-Saharan Africa is undernourished, according to the Food and Agriculture Organization of the United Nations. That proportion has barely changed since the early 1990s. High food prices make gains harder.
It's the extra demand for grains to make biofuels, spurred heavily in the United States by government tax subsidies and fuel mandates, that has pushed prices dramatically higher. The Economist rightly calls these U.S. government subsidies "reckless." Since 2000, the share of the U.S. corn crop devoted to ethanol production has increased from about 6 percent to about 25 percent -- and is still headed up.
This is not a case of unintended consequences. A new generation of "cellulosic" fuels (made from grasses, crop residue or wood chips) might deliver benefits, but the adverse effects of corn-based ethanol were widely anticipated. Government subsidies reflect the careless and cynical manipulation of worthy public goals for selfish ends. That the new farm bill may expand the ethanol mandates confirms an old lesson: Having embraced a giveaway, politicians cannot stop it, no matter how dubious.

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