This brilliant article discusses the contradictions and inefficiencies in agriculatural policies that lead to increased food prices.  My favorite part:

An example, a recent study looking at Nicaraguan coffee production and processing showed that the total energy embodied in coffee exported to several countries - though not all - was not compensated by the dollar price paid for that energy.

Essentially, the conclusion was that the country is exporting subsidised energy.

The Nicaraguan government would be better off giving the farmers money instead of subsidizing coffee.  

the Christian Science Monitor for this hysterical editorial: 

This political catering to the powerful corn lobby, combined with Europe’s parallel rush to biofuels, is raising food prices worldwide, triggering riots in many countries and spreading hunger. A World Bank study found biofuels are responsible for up to 75 percent of the rise in food prices since 2002. And all this for a fuel that contains one-third less energy than gasoline, reduces mileage per gallon and, for many vehicle owners, damages engines.  

Where is any mention of rising energy prices, the main culprit in the food price crisis?

So food companies are actually beneficiaries of rising food prices.  AND, they don’t get any of the blame.  How convenient.  From the article:

Since July 3, however, the U.S. packaged foods index is up more than 13 percent as commodity prices drop and food companies such as Kraft and Sara Lee Corp report earnings that beat analysts’ estimates. Some on Wall Street took heart from the fact that many food companies were able to increase profits even in a weak U.S. economic environment.

They are also finding that branded food makers are benefiting at the expense of restaurants as consumers eat more meals at home to save money.

Frances Cerra Whittelsey, an author and journalist who teaches at Hofstra University, today published this piece in The Nation which clearly explains why the food vs fuel debate is a false one.  He takes the Grocery Manufacturer’s smear campaign head on:

“While concern about rising food prices is certainly justified, for grocery manufacturers the argument is also self-serving. Food manufacturers make their profits not on raw vegetables or commodities like cooking oil but on processed foods, and they want to direct public anger about food price inflation away from themselves. Packaging, processing, advertising, transportation and profits account for most of the price of processed foods, and the surging price of oil figures heavily in that mix. The cost of corn, even as the major ingredient in a food like corn flakes, accounts for a tiny fraction of the final price.”

Kudos Frances.

British Petroleum is investing $90 million bucks in Verenium, Corp., to develop second generation biofuels.  According to Guy Chazan, a Wall Street Journal reporter in the UK:

“So-called second-generation biofuels are garnering support amid concerns that corn-based ethanol is driving up global food prices and putting pressure on land resources.”

Wow, we should all be so thankful for British Petroleum, willing to invest $90 million to help the little guy with food costs.  Gimme a break! The reason food prices are so high is because of companies like BP, and skyrocketing oil prices. Not because we are using biofuels to reduce our dependence on oil.

Smart piece in the Dakota Voice discusses some new studies that put everything into perspective: 

THE LATEST STUDY was done by a group of Purdue University agricultural economists. While they say biofuels are a part of the equation of our national predicament today they are not the blame, by far, for the entire enchilada, including a weak dollar, higher prices for food and, especially, the high oil prices. In fact, these economists say the food prices will stay high as long as oil prices are high and the dollar is weak. One shouldn’t have to be a rocket scientist to understand that.

The lead person on the study, Wally Tyner, said, “Lower oil prices and a strong dollar would bring pressure on commodity prices to fall.” In fact, he said the full effect of higher corn and soybean prices haven’t shown up in the grocery prices yet.

Who do you think delivers the groceries, the dairy products, eggs and such to the grocery stores? Think about it. And what is the fuel that these trucks are using. It ain’t peanut butter, but diesel fuel that has never had the price tag on it as it is today.

No, it ain’t peanut butter fueling the world’s trucks. 

Great story on how some Americans are facing the rising price of produce.   From the story:

From Atlanta to Seattle, people are reacting to the stagnant economy and the high cost of produce by planting their own fruits and vegetables, say garden-store owners, bulk seed sellers and industry analysts.

In the skyscrapered canyons of New York City, increasing numbers of people are growing their food on fire escapes, on rooftops, in backyards and in community gardens.

None of the produce staples that are described in the article are affected by demand for corn. 

That’s according to Mark O’Neil, spokesperson for the Pennsylvania Farm Bureau.  In this article O’Neil says:

Mark O’Neill, spokesperson for the Pennsylvania Farm Bureau, explains that multiple factors are responsible for the recent price increases of agricultural products. He says that one of the media’s top villains, ethanol production, is actually a very small part of the picture, creating only 3 percentof corn price rises on a global scale.

“Fuel costs are the huge driver, and 44 percent of the price increases for food are linked to petroleum,” says O’Neill. “This includes costs for transport and packaging. Yet, our farmers can rarely pass on their escalating costs, because the market sets the prices for food and not the farmers.”

O’Neill also mentions that a growing middle class and associated higher food demands in countries such as China and India are inflationary. The weak American dollar may encourage export of food to these countries. Weather related issues, such as the six-year Australian drought, as well as a recent reduction of global food stocks, have also caused grain prices to spike. “Political unrest in certain parts of the world is creating an inability for these countries to maximize agricultural production technology,” adds O’Neill.

How could this be.  Weren’t we told corn prices were the cause of food price increases?   From Grand Island (Nebraska) Independent: 

Recent criticism from the food industry blamed high corn prices for increasing food costs. Demand for corn for ethanol production was one of many factors contributing to higher corn prices. Other factors include weather problems, increased exports, devaluation of the dollar and increasing world demand.

Hutchens said that since the highs in the corn market were traded in late June, corn futures have dropped by about $2 per bushel, cutting about 25 percent off its value.

“The Grocery Manufacturers Association and its members were quick to blame corn prices to justify their price increases, but will they lower their prices now that corn prices have fallen?” he said. “We believe the answer is no, they won’t lower prices a penny. The reason is what we’ve said all along, that the main driver in higher food prices is high oil prices.”

And if food prices decline, it’s more likely those drops in prices will have to do with lower transportation costs. Since July 16, Nebraska AAA reported, the average cost of regular gasoline has fallen nearly 40 cents per gallon, though diesel prices have only declined 17 cents during that same time period.

Barron’s has a piece this week by author John Steele Gordon that looks at the historic picture in the rise of food pricesL  From the article:

Subsistence farming, which dooms its practitioners to an endless cycle of poverty, is declining rapidly. For the first time in millennia, farming is not the leading occupation of human labor. In 2006, only 36% of the world’s workers were farmers, while 42% were in services and 22% in industry. As people enter the cash economy and get better-paying jobs, they can move up the economic ladder and, with disposable income, up the food chain as well.

WHILE THE MARKET SURELY WILL REDUCE CURRENT food prices, it will be a long time, if ever, that we see them as low — relative to average per-capita income — as they were in the 20th century.

The whole piece is well worth a read.