Food Price/Shortage Complex

There are several issues with using foods for fuel and the impact this is having on the food supply. Warnings have been issued for a decade. However, a balanced perspective on causes is in order when considering the current shortages and price increases. Oil producing countries are attempting to blame food price increases exclusively on biofuels. Issues are much more complex with multiple causes.

The primary problem with the food supply is government involvement to serve special interest groups at costs to others. Some special interest groups are calling for more government action, yet this is a core cause of food problems.

A key issue with biofuels is removing a buffer capacity in the food supply, exposing the worlds food supply to vulnerabilities exacerbated by other factors. Biofuels add to the potential for a "perfect storm" in the food supply.

Factors for the current shortage and price increase, in no particular order, include:
1. Government payments to farmers to not produce crops?
2. Governments erect crop trade barriers preventing free production and flow of goods
3. Biofuels - The USA diverted one-third of corn into ethanol for vehicles. More acreage is set aside for ethanol production. This has increased prices for corn and other staples such as soybeans and cotton.

4. Natural climate cycles cause shortages - U.S. wheat stocks are at the lowest levels in 60 years because worldwide consumption of wheat has exceeded production in six of the past eight years. Back-to-back failure of two years of wheat crops caused by drought in Australia.

5. Energy costs have drastically increased: Farmers also have raised prices because they have been hard hit by spiraling energy costs. This has also driven up the cost of nitrogen fertilizer made from natural gas.

6. Commodity Speculation - An influx of investors and speculators has exaggerated prices. Big Wall Street firms and hedge funds have taken huge positions in futures markets that once were dominated by relatively small operators such as farmers and grain-elevator owners.