Sunday, April 20, 2008

High Food Prices

According to United States Department of Labor, the index for grocery store food prices has increased 5.9 percent annual rate. The forecasts for food prices show a trend of increase to 3.5 - 4.5 percent. Many people blame the rising in food prices is due to corn ethanol, where we observe the recent rise in corn prices in the supermarket. Technology Review published by MIT states “rising corn prices are already affecting everything from the cost of tortillas in Mexico City to the cost of producing eggs in the United States” (Sauser, 2007). The price of tortillas not only doubled in the past year, and has affected animal feed especially poultry and pork. David Victor, director of the Program on Energy and Sustainable Development at Stanford University says it is almost certain that most of the rise in corn prices is due to the U.S. ethanol policy.

However, it is noted that the crop prices rising is also due to “imbalance of supply and demand” (Kanellos, 2008). Based on the article from CNET News, Steve Koonin, chief scientist at BP and a former faculty member at Caltech, thinks “the emerging world is consuming more food, and the imbalance has been exacerbated in recent years because of crop failures in the Ukraine and the Midwest.” Also, Fuel has also worsened the situation since the fossil fuel is directly related to transportation cost. Koonie believes the situation will only get worse and become the “defining challenge of the next couple of decades” (Kanellos, 2008)

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