While Al Gore is busy preaching about global warming and environmentalists around the world hail ethanol as a solution to the "global warming" problem, the less fortunate, poorer countries in the world are in the midst of political turmoil as citizens riot and protest over soaring food prices. As reported by Marketwatch: "In Egypt, headline inflation jumped to 14.4% in March, with the pace of food price rises soaring to 20.5% year-on-year from 16.8% in February. In addition, the country is suffering from shortages of bread, which is heavily subsidized by the government."
As global demand for soft commodities soars, Egypt, like many other countries, is confronting surging food prices, which have stirred popular discontent and demonstrations." We have seen demonstrations as well in Haiti, and we all know about surging food inflation in China. Countries like India, Vietnam and Cambodia, have limited rice exports as well. Why? Because farmers, heavily subsidized, have turned over crops in order to grow corn for ethanol production. Funny how environmentalists say climate change is a problem that in 25-30 years could cause significant destruction to the earth. Of course global hunger and starvation could cause more havoc, in the very near term, but they don't mention that.
I admit it is not only the fault of ethanol. Many of the countries mentioned above have controlled economies and set price controls, which generally contributes to shortages and surging prices.
Those of us fortunate to be citizens of the U.S. have also watched food prices soar, we don't live in a command economy and for the most part, don't have price controls. If our politicians would have an honest debate about the pros's and con's of ethanol, maybe we could not only do something about climate change but solve the problem with food inflation as well.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 4/13/08.
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Reader Comments (Page 1 of 1)
4-14-2008 @ 4:55PM
John said...
Many climate-change scientists have argued against corn ethanol.
Do you think just maybe drought conditions throughout much of the world have contributed just a little bit to the problem.
I don't want to speculate upon out of from where you pulled the 25-30 years number, but climate change is not going to cause widespread destruction in 2035 to 2040.
On the corn farm where I grew up, rice-fed farm girls were never in much abundance.
5-12-2008 @ 8:35PM
Stucko said...
I beg everyone to stop getting all excited about the current media hype and think for themselves. If you look at all the contributers to rising food costs in the world and the reasons for shortages in some areas you will quickly see for yourself that ethanol production is not to blame.
In the US and most of the world the increased cost of petroleum's impact on processing and transportation has created the increases several degrees of magnitude greater than what ethanol has created due to agricultural shifts.
Please remember, in the US and other nations, farmers have been paid not to produce, and have struggled with financially due to low prices. Now supply and demand is creating a positive financial picture for the family farm, until now, everyone was worried about losing the family farms because they couldn't make it financially. Hmmm let's think about that.
The world operates on supply and demand and yes corn is in high demand which causes prices to increase. What many people are ignoring is this new demand for agricultural products will actually help rural economies throughout the world as they will now be able to compete with "cheap" US grain prices.
So please do the math, think globally/holistically and think for yourself. If you want some unbiased facts to aid your thinking see what the Federal Reserve has to say about food prices
www.kansascityfed.org/RegionalAffairs/MainStreet/MSE_0108.pdf
My last thing for you to ponder; if corn is so expensive now, why does a box of corn flakes still contain less than ten cents (US) worth of corn at the current prices?
5-21-2008 @ 3:35PM
Evelyn said...
Makes me really glad I'm growing my own food. Natural, grass-fed/finished, holistically & humanely treated organic meat. Organic Fruits & Veggies. But, the city I live in (animals are on the farm, out of town) doesn't want me planting food. They want me to have a lawn,"Like everyone else." Seems to me that if you want to stop Global Warming & improve the environment, we ought to look at the attitudes in our own yards. Do you have lawn instead of food planted in the yard of your house or apartment? WHY?? Are your plants treated w/ chems? WHY?? Stop telling ME how to live & start doing it yourself! Be an active environmentalist instead of an environmental activist!
6-08-2008 @ 1:52PM
Bobby said...
The main problem the world is experiencing right now is lack of "common sense" to go along with the theoretical unproven mumbo jumbo that's causing the present day unraveling of global good will & national economies alike.
It's a known fact scientists & researchers are hell bent to prove their side of the tug of war on environmental issues to be factual leaving the most important part of the contemporary equation out. What will happen to civilization today?
Perhaps it might be a good thing if millions are on the verge of starvation so the line in the sand (Arabic sand) can be stepped over & the real culprit identified.
If there was any justice or true organization the industrialized countries of the world would demand in unison that OPEC come off the pricing of a commodity that by rights doesn't truly belong to them just because they sit on top of it. They didn't produce it, it's a birthright only from a geographical stand point.
If we have a true global economy they'll realize that before millions truly starve & the war drums beat in their direction. When the multitudes begin to suffer,, this is what they turn to....