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Oil at staggering $126 a barrel

Food and fuel follies

By Ed Feulner
May 8, 2008

"What could possibly go wrong?" That's what members of Congress probably thought when they started shoveling bigger subsidies at ethanol producers. Now, with food riots erupting in some parts of the world, we have our answer: a lot.

Other factors — a weak dollar, high energy costs, low crop yields in places such as Australia — have played a role in this crisis. But diverting food to fuel is clearly a contributor and it exacerbates the situation.

How serious is the problem? According to U.N. Secretary-General Ban Ki-moon, without emergency intervention, "we risk again the specter of widespread hunger, malnutrition and social unrest on an unprecedented scale." The world needs more food — especially corn, large amounts of which are used for fuel.

People, of course, consume corn, and it's in nearly every processed food we buy. Livestock, too, feed on corn. Some chickens eat 40 pounds of it in a matter of weeks. So a jump in the price drives up prices in just about every aisle of the supermarket. Unsurprisingly, the U.N. found the market prices of cereals, dairy produce, meat, sugar and oils rose 57 percent from March 2007 to March 2008.

There should be enough corn to go around. "Producers plan to plant 86 million acres of corn this year," the U.S. Agriculture Department reported in March. "While 7.6 million acres less than 2007, this would still be the second-largest area since 1949."

But too little of that corn is used as food. A quarter of American corn is turned into ethanol, and that is set to rise. Last year the federal government mandated that ethanol production grow fivefold by 2022.

Sensibly, some lawmakers are moving to suspend that law, or even repeal it and the subsidies altogether. We can't afford to keep burning so much corn while people go hungry.

The food crisis should surprise no one. When 25 percent of a staple crop is taken off the table, shortages result. Just last year, two economics professors predicted the current food shortages.

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