Posts tagged with: food

Blog author: lglinzak
Wednesday, May 4, 2011
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Everywhere we look we are facing rising prices. We find them at the gas pumps and now we see them at our supermarkets. Food prices are climbing, and just like gas prices, they are having broadly felt adverse effects on Americans.

The Wall Street Journal sat down with C. Larry Pope, the CEO of Smithfield Foods Inc., the world’s largest pork processor and hog producer by volume, to discuss the rising food prices and how they are affecting his business. Pope attributes the increase in food prices to corn prices and the ethanol industry:

It’s also a business under enormous strain. Some “60 to 70% of the cost of raising a hog is tied up in the grains,” Mr. Pope explains. “The major ingredient is corn, and the secondary ingredient is soybean meal.” Over the last several years, “the cost of corn has gone from a base of $2.40 a bushel to today at $7.40 a bushel, nearly triple what it was just a few years ago.” Which means every product that uses corn has risen, too—including everything from “cereal to soft drinks” and more.

It is also important to note that, while Pope does not go into great detail, he points to the depreciating dollar as playing a role in inflated food prices.

Pope says the majority of his customers will be hurt by rising food prices:

“Maybe to someone in the upper incomes it doesn’t matter what the price of a pound of bacon is, or what the price of a ham, or the price of a pound of pork chops is,” he says. “But for many of the customers we sell to, it really does matter.” Workers can share cars when the price of oil rises, he quips, but “you can’t share your food.”

As food prices rise, what are most people expected to do? Many are on a limited budget and where will they cut back? Increasing food prices may also result in people turning to cheaper less nutritious food. Lora Iannotti, public health expert and professor at Washington University in St. Louis, explains how rising food prices lead to nutritional problems for everyone—especially the most vulnerable:

“During a food price crisis, households moved away from ‘luxury’ food items such as meat, fish and dairy products to poorer quality food,” she says.

Data from nationally representative household budget surveys show that during a food crisis, calorie intake is reduced by an average eight percent from pre-crisis levels, equally affecting rural and urban areas.

“We are particularly concerned for families with young children,” Iannotti says. “When you have a reduction in calories and critical nutrients for kids under 2, there are long term consequences such as stunted growth, cognitive deficits, lower educational attainment, and reduced future productivity.”

Like many other critics of the ethanol subsidy, Pope calls for an end to these subsidies. That would be a significant aid to reigning in the high food prices:

…Mr. Pope says, get rid of the ethanol subsidies and the tariff. “I am in competition with the government and the oil industry,” he says. “It’s not fair.” Smithfield’s economists estimate corn prices would fall by a dollar a bushel if ethanol blending wasn’t subsidized. “Even the announcement that it is going away would see the price of corn go down, which would translate very quickly into reduced meat prices in the meat case,” he says. Imagine what would happen if the mandate and tariff were eliminated, too.

Gary Wolfram, economics and public policy professor at Hillsdale College, offers a similar message. Wolfram points to the sharp increase in food prices, the inefficiency of corn ethanol, and calls for the end of ethanol subsidies:

World food prices are on the rise. In the United States, retail food prices rose .6 percent in February and are up 2.3 percent from February of 2010, the highest 12-month increase since May 2009. Part of the reason for the revolutionary fervor in the Middle East is rising food prices. Yet our government provides a $6 billion per year subsidy to turn the U.S. corn crop into gasoline. Ever gallon of ethanol refined into gasoline receives a 45-cent per gallon subsidy.

[…]

But this inefficient use of corn does more than just cost taxpayers’ money. It is part of the problem of increasing food prices. Ethanol makes up about 8 percent of U.S. fuel for vehicles, but uses up about 40 percent of the nation’s corn crop. The Economist estimates that if all the American corn crop that goes into ethanol were used as food, global corn food supplies would increase by 14 percent.

And as an article in Investors.com argues, ethanol has failed to achieve many of the goals that its proponents claim it would achieve.

Acton’s criticism of the ethanol subsidy is not new. In 2008, Ray Nothstine was interviewed and articulated the moral problems with the ethanol subsidy, the unintended consequences, and inefficiencies of ethanol that are now coming to light. Readers can listen to the interview here.

Rising food and gasoline prices are causing people to bear economic hardships, and, with limited household budgets, these trends cannot continue. Many leaders and economists are correct in calling for a reevaluation of our ethanol policy.



Gas prices are not the only thing on the rise. As of yesterday, corn is at its highest level in three years at $7.60 a bushel and prices are not predicated to go down anytime soon. The United States government anticipates a shortage despite farmers’ intent to plant 5 percent more acreage of corn this year, a shortage is still predicted.

Reuters also indicates that rising corn prices will continue:

U.S. corn prices will keep rising to new highs over the coming months, a new Reuters poll has found, as demand from ranchers and ethanol makers proves better able to withstand record costs than many thought.

The forecasts will compound inflation concerns as higher feed costs filter through to beef and chicken prices. Analysts also warned that anything less than perfect growing weather for the spring crop could push prices even higher as traders fear tight conditions will extend well into next year.

As the article later states, the chances of having a perfect growing season with no weather related problems are very slim.

Reuters also asserts that food prices rose by 14 percent over the past three months which can be attributed to the rising use of ethanol and the ranchers demand for feed for livestock: “The rally has sharpened the focus on two imponderables: the price point at which livestock ranchers or ethanol makers will begin to cut back use, relieving demand pressures; so far, traders say there’s little evidence of this happening yet.”

Perhaps the United States should learn from China’s mistake. An article in the New York Times describes how the biofuel sector does affect the food supply and price, and how China’s ethanol use resulted in higher food prices:

It can be tricky predicting how new demand from the biofuel sector will affect the supply and price of food. Sometimes, as with corn or cassava, direct competition between purchasers drives up the prices of biofuel ingredients. In other instances, shortages and price inflation occur because farmers who formerly grew crops like vegetables for consumption plant different crops that can be used for fuel.

China learned this the hard way nearly a decade ago when it set out to make bioethanol from corn, only to discover that the plan caused alarming shortages and a rise in food prices. In 2007 the government banned the use of grains to make biofuel.

However, the article later explains that China is now using cassava, instead of corn. China may have not entirely learned their lesson as cassava is still a food crop used predominately in Africa and also in China during food shortages.

The article by the New York Times adequately closes with a quote from Olivier Dubois, a bioenergy expert at the UN’s Food and Agriculture Organization that gets at the root of the food and fuel argument: “We have to move away from the thinking that producing an energy crop doesn’t compete with food,” he said. “It almost inevitably does.”

Previous blog posts on ethanol, rising food prices, and the moral issues of the two can be found here, here, here, and here.

Blog author: lglinzak
Wednesday, March 16, 2011
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As a follow up to recent blog posts (here, here, and here) where rising food prices have been discussed, the most current numbers have been released. What many of us already know from visits to the grocery store is that food prices have increased dramatically.

Food prices rose by 3.9 percent in the month of February, making this the largest increase since November of 1974. An article from the Associated Press explains the rise in food prices while also showing the rise in energy prices:

The Labor Department said Wednesday that the Producer Price Index rose a seasonally adjusted 1.6 percent in February — double the 0.8 percent rise in the previous month. Outside of food and energy costs, the core index ticked up 0.2 percent, less than January’s 0.5 percent rise.

Food prices soared 3.9 percent last month, the biggest gain since November 1974. Most of that increase was due to a sharp rise in vegetable costs, which increased nearly 50 percent. That was the most in almost a year. Meat and dairy products also rose.

Energy prices rose 3.3 percent last month, led by a 3.7 percent increase in gasoline costs.

As the AP states — and which we’ve been saying here on the PowerBlog — there are many culprits behind rising food prices: “Food costs, meanwhile, are rising. Bad weather in the past year has damaged crops in Australia, Russia, and South America. Demand for corn for ethanol use has also contributed to the increase.”

Blog author: lglinzak
Wednesday, March 9, 2011
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A big report is due out tomorrow which may have a positive or negative impact on economies across the globe. These numbers are not coming from the New York Stock Exchange, NASDAQ, the Tokyo Stock Exchange, the London Stock Exchange, or any other stock exchange; they are actually coming from a report being released by the U.S. Agriculture Department (USDA). It will talk about the role the U.S. will play in preventing or reducing the effects of a global food shortage.

There have been many pundits warning about a global food crisis resulting in a substantial increase in food prices. Shoppers are already experiencing the effects of higher food prices, with wheat prices up 80 percent from a year ago and U.S. retail food prices expecting to climb about 4 percent this year.

And prices are not expected to come down any time in the near future. The Ogallala Aquifer in the U.S. is depleting, and without a way to replenish itself, experts are wondering if the U.S. is on the verge of seeing another dust bowl. Texas’ wheat crop is also predicted to not meet harvesting expectations as 56 percent of its crop is rated in poor to very poor conditions by the USDA with dry weather persisting. Furthermore, an article published in Foreign Policy articulates many variables contributing to the increase in food prices and the potential food crisis which include population increase, arable lands depleting, the increasing demand for water for numerous uses, and urban sprawl. The industry is left with a lot of factors to compete with while trying to keep prices as low as possible.

It is important to note that the developed world is not immune from the adverse effects of a potential food crisis. Karen Ward, senior global economist at the worldwide bank HSBC, explains slow wage growth and use of food crops in alternative fuels are going to result in problems for those living in developed countries. While speaking on Jeff Randall Live, Ward also warned the UK may be subject to the food riots similar to those that occurred in other countries:

“Even in the developed world I think we have very, very low wage growth, so people aren’t getting more in their pay packet to compensate them for food and energy, and I think we could see social unrest certainly in parts of the developed world and the UK as well.”

She went on to highlight the link between high food prices and the escalating cost of crude oil.

“More and more we are seeing that some of these foodstuffs are actually substitutes for energy itself, particularly biofuels. So I think the energy markets are a significant contributor to these food price gains.”

While farmers are continuing to produce bigger crops, the U.S. is expected to see a 4 percent increase in the area planted along with a harvest record for corn of 13.73 billion bushels, it still may not be enough. However, corn is on such high demand due to the increase of the ethanol industry in the U.S., and current rising oil prices are even further contributing to the demand for ethanol. As a result, the 10 percent increase that is projected in the corn harvest will only add to reserves in the U.S. by five days, and by the time the fall harvest begins, the USDA predicts the U.S to only have enough corn left to satisfy the country’s appetite for 18 days.

Whether there is a food crisis of 2011 or not does not avoid the much needed ethical debate involving the use of crops. As I discussed in an earlier post, the U.S. is mandated to continue to increase its ethanol production, and with biofuels increasing the demand on crops and ever increasing population that demands food, priorities need to be evaluated and questions need to be raised. Shall more emphasis be placed on crops being harvested for food consumption or fuel usage?

After taking a look yesterday at economic consequences of rising food prices along with the affects ethanol may have on the rising food prices, a moral perspective must also be taken into account.

As I stated in my previous blog post, the World Bank says rising food prices have pushed 44 million more people into extreme poverty in developing countries since June of 2010, and are having an adverse effect on people around the globe.  The increase in demand and expanded use of crops have caused global stockpiles to erode.  Stockpiles are important to help ensure a steady flow of food, especially during traumatic times such as large food shortages.  Even the corn stocks of United States, the world’s largest corn producer, amount to 5 percent of annual use which is far below the 13.6 percent average that they have been kept at over the last 15 years.

We are also called to be stewards of the Earth and this not only means not abusing the one planet we are given, but also ensuring that we leave a planet in good condition for future generations.  However, recent studies have called into question whether ethanol is actually better for the environment.  A study conducted by the University of Minnesota demonstrates that corn ethanol is actually more harmful than gasoline to the environment.  Furthermore, a recent article from Forbes also articulates that ethanol gasoline lets out more harmful toxins than regular gasoline.  There are even suggestions that ethanol uses more energy per gallon to produce it than the energy contained the actual gallon of ethanol.

In 2007, Ray Nothstine’s commentary Big Corn’ and Unitended Consequences pointed out some of the effects of rising food prices and the environmental implications of ethanol production.

Ethanol is expensive to produce, has contributed to a rise in gasoline prices, and has its own pollution problems. It requires a lot of fertilizer, fresh water, and productive farm land. And, because of corrosive properties that make pipeline transportation problematic, it takes a lot of trucks to haul it.

While the policies behind increased ethanol production may have been intended to promote good environmental stewardship, the actual results may show a higher negative environmental impact than other fuel sources.

If ethanol is causing the problems recent studies have indicated, then is the ethanol subsidy and the government mandate to continue the increase use of ethanol sound policy?  Continued funding for the ethanol subsidy and a mandate to increase the use of ethanol, when it may not be accomplishing its originally intended goals, might be cause to reevaluate ethanol’s future.  With food prices on the rise, and the demand for wider uses for crops across the globe also rising, the United States continues to fund the current ethanol policy, which may become counter intuitive to its original goals. The United States currently dedicates 40 percent of the amount of corn it produces each year to ethanol, and so you wonder if we are actually working at cross purposes to sound stewardship, and if so, it may be time to look towards a more morally sound solution.

Economies across the globe are struggling, and rising food prices are not going to make life any easier.  The Acton Institute raised concern for rising food prices, especially corn, in 2007, when Ray Nothstine wrote a commentary on, and at the time, record prices for corn, resulting in revolts in Mexico due to rapidly rising prices for tortillas.  The commentary brought to light unintended consequences of ethanol and its subsidy, including rising food prices.

And again, with food prices on the rise, and the subsidy for ethanol up for renewal, the debate has been given new life.

Corn prices are dramatically rising and are currently more than $6 per bushel.  Compare that to a few years ago in 2005, when corn was less than $2 per bushel.  Also, in November of 2010, corn prices reached a two year high.  However, corn is not the only food stock on the rise.  The past year wheat on Chicago Board of Trade was up 74 percent, and both soybean and cotton futures have already jumped.  Although, these rising food prices have had an adverse effect across the world, and according to the World Bank, since June of 2010, the rising food prices have pushed 44 million more people into extreme poverty in developing countries.

The debate over the cause of rising food prices, especially corn has centered around whether current adverse weather conditions are the culprit, or if it can actually be contributed to ethanol subsidies from the United States.

Weather conditions have recently been less than ideal for growing crops in many parts of the world.  Last year drought in Russia and Argentina, along with torrential rains in Australia and Canada caused numerous problems for farmers, and crop production was less than expected.  Furthermore, a cool wet summer in the United States resulted in a delayed harvest.  China’s current wheat crop is being threatened by a drought which may result in even higher food prices especially because China produces more wheat than any other country.  It is estimated approximately 42 percent of China’s winter wheat crop has been hurt by the drought.

While the unfavorable weather conditions have contributed to rising food prices, critics of the ethanol subsidy claim that the subsidy has played a major role in the rising food prices.  The ethanol subsidy, which is up for renewal, places a 54 cent tariff on imported ethanol and a 45 cent tax credit for every gallon of ethanol blended with gasoline.  Current federal law also mandates the use of ethanol.  Oil companies must use a designated amount of ethanol each year, 12.6 billion gallons in 2011, which will rise to 15 billion gallons by 2015.  The ethanol subsidy is paying oil companies to abide by a mandate required by federal law.

The use of corn in ethanol is continuing to rise.  The oil industry uses more ethanol each year because of the federal mandate, and as of November 2010, ethanol production consumed 40 percent of the corn crop produced in the United States.  If the United States decides not to renew the ethanol subsidy it will not only  save 40 percent of its corn crop, but will also save $25-$30 billion over the next five years.

The United States is a major exporter of food, supplying over half the global corn exports and over 40 percent of soybean exports.  However, with more and more corn produced in the United States being used for ethanol, less corn is used for food; thus, by the law of supply and demand, increasing the price of corn.  With the ethanol subsidy creating an increase demand for corn and raising the price, more and more farmers will gravitate to growing corn instead of other crops that are also needed for food supplies around the world.

With food prices on the rise, it is imperative to think long term when deciding if the ethanol subsidy should be renewed.

Not only are the economic arguments to the ethanol subsidy important, but so are the moral arguments.  Tomorrow I will evaluate the morality of rising food prices and the ethanol subsidy.

Acton On The AirKishore Jayabalan, Director of the Acton Institute’s Rome office, made an appearance today on Vatican Radio to discuss efforts by the G-20 nations to address the growing problem of rising food prices around the world.  Jayabalan discusses how natural events and bad policy are both contributing to the sharp rise in prices seen of late.  Listen to the full interview using the audio player below:

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Blog author: jballor
Wednesday, December 15, 2010
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Steve Connor in The Independent (HT: RealClearReligion) speculates about some happenings at the Vatican with regard to genetically-modified (GM) food. It’s important to note, as is the case in this article, that things that happen in various committees and study groups at the Vatican do not by default have some kind of papal endorsement.

To wit:

A leaked document from a group of scientists linked to Rome has set a hare running about the possible endorsement of GM technology by the Pope. The document, from scientists linked to the Pontifical Academy of Sciences, suggested that there is a moral duty to adopt GM technology in order to combat hunger.

Connor’s larger point is more chastened and more accurate, however. “Intriguingly, although the debate over GM crops has died down in Britain for the moment, something tells me it is set once more to become one of the most contentious scientific issues of our time – and one where both sides will invoke morality to justify their position,” he concludes.

I’m generally in favor of allowing GM food, with the caveat that animals have a different moral status than do plants. I sketch out a case in “A Theological Framework for Evaluating Genetically Modified Food.” More recently you can see an Acton Commentary from earlier this year, “The Science of Stewardship: Sin, Sustainability, and GM Foods.”

I also should note that the use of GM foods to patent certain seeds, which then naturally circulate to non GM cropland, raises a whole host of issues related to property rights that are quite complex and can’t be dealt with here. I will say, though, that it’s not obvious to me why farmers shouldn’t have the rights to keep their crops from being exposed to GM seeds if they don’t want them to be and further how in the case of such involuntary exposure the responsibility to mitigate lies with the non GM crop farmer.

Blog author: jcouretas
Monday, December 13, 2010
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Jordan’s post on hunger raises a timely question, on a day when First Lady Michelle Obama was on hand to watch the president sign the $4.5 billion “Healthy, Hunger-Free Kids Act” at a Washington elementary school. Despite the media coverage and White House spin that points to this in part as a hunger fighting piece of legislation, the measure is really about obesity. Because in America, the real problem with food is superabundance and waste, not scarcity and hunger.

As Bloomberg noted today:

Almost 20 percent of 6- to 11-year-olds were considered obese in 2007-2008, according to a study by the Atlanta-based Centers for Disease Control and Prevention. Obese children are more likely to have health issues like Type 2 diabetes and high blood pressure according to the CDC.

A study published last year estimated the cost of treating obesity-related ailments in 2008 at $147 billion. The study, noted the Washington Post, “compared medical costs for normal-weight people to those for obese people, suggests that curbing the obesity epidemic is key not only to ensuring a healthier future for Americans, but also to reining in health costs.”

The Centers for Disease Control helpfully suggests that schools should be located “within walking distance of students’ homes and making it easier for people to get access to healthful foods.” Of course, these tips largely will be ignored, as will most other nanny state directives on eating healthy diets and exercising that have been around for decades. Walking to school? That’s what minivans are for.

Now, you can argue that poor people are consuming too much bad food. You can argue that government farm subsidies foster production of the wrong kinds of food. All that is debatable and subject to honest differences of opinions as to causes and solutions. What doesn’t seem obvious is that millions of Americans are going hungry. This is what we get constantly from the religious left and the U.S. hunger lobby, which sees expansive government welfare programs as the inevitable answer. (more…)

Blog author: jballor
Monday, December 13, 2010
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In an otherwise fine piece focusing on innovative techniques used by food banks to increase efficiency, while at the same time improving service and the recognition of the dignity of those they serve, Bread for the World president David Beckmann uses the opportunity to throw a dose of pessimism into the mix.

“We can’t food-bank our way to the end of hunger,” said Beckmann, co-recipient of the 2010 World Food Prize. “Christian people need to change the politics of hunger as well.”

Well. So what if “we can’t food-bank our way to the end of hunger”? Does that mean that we have to make governmental lobbying our primary focus? How about using the opportunity to praise best practices and improvements in the way food banks are run? How about talking about the important and indispensable role that food banks play?

It might just be that framing the problem as political by definition minimizes the role that private charity and local giving play. The emphasis all too easily becomes one of lobbying and advocacy rather than taking practical steps to address hunger in local contexts.

Perhaps I’m making too much of this. But I think we can see right where the “politics of hunger” mindset leads. Here’s an example from my local area: “West Michigan food pantries see drop in demand, but not for a good reason.”

Here in West Michigan local food bank officials point not to decrease in demand or need, but instead toward “increased state food assistance and accessibility.”

While local food banks are seeing their usage numbers decline, “We have continued to set records every month (for the food assistance program) for the past 18 months, said Edward Woods, communications director for the state Department of Human Services (DHS). “Recovery funds (federal stimulus) did increase the amount of food assistance by nearly 14 percent.”

If changing the politics of hunger means that fewer people use food banks and food pantries in favor of government welfare then I have no interest in changing the politics of hunger. Instead I want to see hunger de-politicized.

All too often discussion about charitable causes end up downplaying direct charitable giving and activity with calls for political activism and advocacy. Jim Wallis, for instance, has said “I often point out that the church can’t rebuild levees and provide health insurance for 47 million people who don’t have it.”

Instead of talking about what food banks can’t do and what Christians can’t do, I like the observation from Ron Sider about the untapped potential of Christians to act on their own through their own institutions without resorting to government advocacy.

Sider says, “If American Christians simply gave a tithe rather than the current one-quarter of a tithe, there would be enough private Christian dollars to provide basic health care and education to all the poor of the earth. And we would still have an extra $60-70 billion left over for evangelism around the world.”

Obviously evangelism shouldn’t be a “leftover” priority, but you get the point. Christians and churches can and should do more, and calls to change the “politics” of hunger, poverty, and a host of other issues let us off the hook too easily.