Food/gas squeezing consumers, causing worldwide instability

Link to article here. Also, read more here.

The article states: “Ethanol production has also diverted corn from dinner tables and into fuel tanks.” Our failure to secure energy independence is literally taking food out of our mouths.

So let me get this straight, while the world goes hungry, our government still pays farmers NOT to produce food, and our farmers are selling/sending U.S. produced food overseas leaving less for their fellow Americans here at home? Something is clearly wrong here. Government has lost its mind or they’re engaging in a sinister scheme to squeeze the poor and middle class into a third world standard of living. Whether by design or by default, the people of this country had better wake-up and DEMAND change before it’s too late!

Food Costs Rising Fastest in 17 Years
Monday April 14, 4:10 pm ET
By Ellen Simon, AP Business Writer
Food Costs Rising at Fast Clip, Squeezing Poor, Forcing Food Vendors to Explain Higher Prices

NEW YORK (AP) — Steve Tarpin can bake a graham cracker crust in his sleep, but explaining why the price for his Key lime pies went from $20 to $25 required mastering a thornier topic: global economics.He recently wrote a letter to his customers and posted it near the cash register listing the factors — dairy prices driven higher by conglomerates buying up milk supplies, heat waves in Europe and California, demand from emerging markets and the weak dollar.

The owner of Steve’s Authentic Key Lime Pies in Brooklyn said he didn’t want customers thinking he was “jacking up prices because I have a unique product.”

“I have to justify it,” he said.

The U.S. is wrestling with the worst food inflation in 17 years, and analysts expect new data due on Wednesday to show it’s getting worse. That’s putting the squeeze on poor families and forcing bakeries, bagel shops and delis to explain price increases to their customers.

U.S. food prices rose 4 percent in 2007, compared with an average 2.5 percent annual rise for the last 15 years, according to the U.S. Department of Agriculture. And the agency says 2008 could be worse, with a rise of as much as 4.5 percent.

Higher prices for food and energy are again expected to play a leading role in pushing the government’s consumer price index higher for March.

Analysts are forecasting that Wednesday’s Department of Labor report will show the Consumer Price Index rose at a 4 percent annual rate in the first three months of the year, up from last year’s overall rise of 2.8 percent.

For the U.S. poor, any increase in food costs sets up an either-or equation: Give something up to pay for food.

“I was talking to people who make $9 an hour, talking about how they might save $5 a week,” said Kathleen DiChiara, president and CEO of the Community FoodBank of New Jersey. “They really felt they couldn’t. That was before. Now, they have to.”

For some, that means adding an extra cup of water to their soup, watering down their milk, or giving their children soda because it’s cheaper than milk, DiChiara said.

U.S. households still spend a smaller chunk of their expenses for foods than in any other country — 7.2 percent in 2006, according to the USDA. By contrast, the figure was 22 percent in Poland and more than 40 percent in Egypt and Vietnam.

In Bangladesh, economists estimate 30 million of the country’s 150 million people could be going hungry. Haiti’s prime minister was ousted over the weekend following food riots there.

Still, the higher U.S. prices seem eye-popping after years of low inflation. Eggs cost 25 percent more in February than they did a year ago, according to the USDA. Milk and other dairy products jumped 13 percent, chicken and other poultry nearly 7 percent.

USDA economist Ephraim Leibtag explained the jumps in a recent presentation to the Food Marketing Institute, starting with the factors everyone knows about: sharply higher commodity costs for wheat, corn, soybeans and milk, plus higher energy and transportation costs.

The other reasons are more complex. Rapid economic growth in China and India has increased demand for meat there, and exports of U.S. products, such as corn, have set records as the weak dollar has made them cheaper. That’s lowered the supply of corn available for sale in the U.S., raising prices here. Ethanol production has also diverted corn from dinner tables and into fuel tanks.

Soybean prices have gone up as farmers switched more of their acreage to corn. Drought in Australia has even affected the price of bread, as it led to tighter global wheat supplies.

The jump has left people in the food business to do their own explaining. Twin Cafe Caterers in lower Manhattan posted a letter on its deli cooler: “Due to the huge increase of the gas, the electricity, the water and all the other utilities, we had to raise the prices a little bit.” It went on to say that all its food prices have risen, too.

Wonder Bagels, in Jersey City, N.J., posted a letter from its wheat supplier, A. Oliveri & Sons, saying the recent situation was unprecedented.

“The major mills across the country are using words like ‘rationing’ and ‘shortages’ if things continue,” it said. “We will sweat out the summer together, hoping there will be some flour left to purchase at any price.”

The letter called for an immediate halt to exports and a change in farm policy, “stop paying farmers NOT to grow crops.” A new farm bill, stalled in Congress, would expand farm subsidies if it passes, however.

For some Americans, the resulting increases might be barely perceptible. The Cheesecake Factory raised prices by 1.5 percent at the end of February, Applebee’s by 3 percent.

But for the poorest U.S. families, the higher costs may mean going hungry. A family of four is eligible for a maximum $542 a month in food stamps, which never lasted the whole month before, Food Bank of New Jersey’s DiChiara said.

“Now food stamps go fewer and fewer days of the month,” she said.

The Food Bank recently got a letter of its own from a key vendor. Its grim message: Sorry, but the prices they charge the Food Bank would be increasing 20 percent, due to food inflation.


Link to article here.

Food Crisis: The Maze Behind Maize
By Austin Bay
I enjoy baking, and “scratch” cornbread is my favorite kitchen oeuvre. I use stone-ground corn meal, and the product is gluten-free — nix on the cup of wheat flour you’ll find in many recipes.

My cornbread hobby isn’t the only reason I watch the price of corn. Gauging Mexican political stability is another. Corn (maize, as the Mexicans correctly call it) feeds Mexico. When corn prices rise, Mexico’s poor must spend more to buy their staple.

The Mexican government knows corn’s price is politically sensitive. In January 2007, published the following short commentary: “Mexican authorities are concerned that a rise in the price of tortillas will lead to civil unrest. The price of tortillas rose 10 to 14 percent in 2006. The cause: international demand for corn.” Mexico planned to import “duty free” several hundred thousand tons of corn to stabilize prices.

Corn prices continue to climb, this month hitting an all-time high of six dollars a bushel, up 30 percent since then end of 2007. Take the all-time high, however, with a dose of mathematics. The Iowa Corn Growers Association argues that the $3.20 a bushel of 1981 would be around eight bucks today.

Prices have increased for numerous, complex and often opaquely connected reasons, but producing ethanol “biofuel” (an alleged “green” alternative to gasoline) certainly contributes to the rising demand for corn.

Ethanol is, or at least, was, “good for America” and a “renewable fuel” that will help end America’s oil addiction. In 2007, the U.S. Congress mandated a “five-fold increase” in bio-fuel production; the bill touted ethanol but also promoted research and development of non-food crop biofuels. However, corn’s price spike has generated the sound bite, “Stop burning food.”

Ethanol is an easy target for the sensationalists. The pun is more accurate than the accusation: A maze of interrelated factors affect the price of maize and most other foodstuffs.

The growing economies of India and China require energy, and demand from these two Asian giants as well as sustained demand from other advanced economies has spurred a long-term rise in oil prices. Higher oil prices bump food prices; it takes energy to raise and transport food.

“Middle class” Indians and Chinese also buy more foods. Lousy weather (in Australia as well as the United States), crop rotation and, in the case of the world’s No. 1 food producer, the United States, fewer acres under cultivation (likely culprit: suburbs) also factor in higher food prices.

So the “world food crisis” sprouting bold headlines this week isn’t so much sudden as it is vexingly systemic.

Recognizing the problem, however, doesn’t feed empty stomachs. Food riots have erupted in Bangladesh, Egypt, Senegal and Ethiopia. Last week, hungry Haitians, rioting over the price of rice, toppled their prime minister.

America is by far the world’s leading food donor. President George W. Bush has made an additional $200 million in food aid available for “Africa and elsewhere” in order to feed starving people.

Emergency aid is the right short-term response to what U.N. Secretary-General Ban Ki-moon calls a “rapidly escalating crisis of food availability.”

But what about the long term? Beware the calls for “structural changes” if that means mandates from bureaucrats. “Smart guy” mandates brought us subsidized ethanol. Large-scale alternative energy that diminishes reliance on oil? That’s a truly systemic solution, but for three decades environmentalist fear-mongers in the United States have stymied the development of nuclear energy, a proven large-scale alternative energy source.

Applying human creativity is also a “structural change.” “Algal fuel” — algae producing biofuel, or methane — is experimental but promising; it sounds sci-fi, but genetically engineered algae might someday produce first-rate fuel.

Genetically modified crops (they already exist, the gift of genetic research) dramatically increase land yields, but they have been tagged as “Franken-foods.” Their fear-inciting critics forget modern corn is hybridized maize.

Austin Bay Austin Bay is author of three novels. His third novel, The Wrong Side of Brightness, was published by Putnam/Jove in June 2003. He has also co-authored four non-fiction books, to include A Quick and Dirty Guide to War: Third Edition (with James Dunnigan, Morrow, 1996). best buy in san francisco test