“Days of cheap food may be over” as researchers apportion blame for food inflation to biofuels, Chinese meat consumption, and crop failures

“The days of cheap food may be over,” said Benjamin Senauer, co-director of the University of Minnesota’s Food Industry Center. His remarks come as food prices rose in 2007 at double the typical inflation rate. Researchers are debating the individual impacts of root causes, such as crop failures, increased demand from biofuel producers, or an increase in meat consumption in China.

A recent study by the Bureau of Labor Statistics showed that the price increase for milk, cheese, meat, ice cream, eggs and malt beverages in April 2006 with April 2007 was 3.0 percent, vs a 25-year annual inflation rate of 3.0 percent.

A biannual IMF report on the world economy said that “The use of food as a source of fuel may have serious implications for the demand for food if the expansion of biofuels continues. One country’s policy to promote biofuels while protecting its farmers could increase another (likely poorer) country’s import bills for food and pose additional risks to inflation or growth.”

The report said that greater international cooperation on biofuel production was needed, and that eliminating barriers on biofuel imports in the US and the European Union would alleviate pressure on the cost of food.

Recently, the chief economist of CIBC World Markets, criticizing the US drive to increase ethanol production, said that “the only thing Bush’s renewable energy policy will fuel is inflation”.

Jeff Rubin linked expansion of ethanol to a 60 percent increase in corn prices, and said food inflation would top 5 percent in 2008 and approach 7 percent in 2009. He said that soaring corn prices passed directly into animal feed costs and tortillas, but are also causing increases in the costs of other grains as corn production replaces other types of production.

Free Subscription to the Daily Biofuels Digest e-newsletter

Related Stories

Earth Policy Institute says 30 percent of US corn will divert to biofuels in 2008; will push meat, dairy prices skyward

In Washington, the president of the Earth Policy Institute said that 30 percent of the US corn crop will be used for ethanol in 2008 and will lead to price increases for food prices. Lester Brown told...

Earth Policy Institute calls ethanol “misguided effort” to reduce oil insecurity

In Washington, the Earth Policy Institute released a report calling the US's focus on ethanol "misguided effort to reduce its oil insecurity," and said that the consequences will be hunger and malnutr...

Chinese government quietly buying arable land abroad as Chinese grain consumption soars

According to Izvestia, the Russian newspaper, and other sources, the Chinese government has commenced buying land abroad, after internal projections showed that the nation's growth in grain consumptio...

“It’s not food, it’s not fuel, it’s China”: Expanded study of impact of China on global corn market

A change in Chinese meat consumption habits since 1995 is diverting eight billion bushels of grain per year to livestock feed and could empty global grain stocks by September 2010, according to a new ...

Ethanol mandate shutdown would drop corn prices no more than 14 percent, experts testify in Senate

In Washington, Iowa State University economist Bruce Babcock testified before a US Senate committee yesterday that if all ethanol subsidies were halted immediately, the price of a bushel of corn would...

Meat, grocer associations going all-out on ethanol subsidy, tariff

In Washington, meat producers are mounting a full-court press to eliminate the ethanol tariff and ethanol subsidies, to reduce pressure on corn prices that affect chick production costs. The industry,...