Farmers are Growing Corn for Ethanol

Is the food crisis caused by the lack of primary crops? No. Farmers continue to grow as much corn and other crops such wheat, millet as before, but the only problem is that they are producing for bio fuel. Here is a good summary of the problem.

"The surge in food costs has been attributed to several factors, including the increasing number of American farmers who now grow corn to supply the ethanol industry instead of food companies. In turn, they have reduced the amount of land farmed for wheat and soybeans, leading to a huge strain on food processors such as ConAgra Foods, Kraft Foods, General Mills, and Kellogg.

Corn prices have soared, hitting $6 a bushel, up 50% from 2007 and triple the price of three years ago. Corn is the main ingredient in livestock and poultry feed, so prices of milk, chicken, and meat are also higher. "It is important to note the contribution of runaway energy prices to the retail cost of food," says Jim Sartwelle, an economist with the American Farm Bureau. "Transportation, processing, and packaging cost significantly more now than in prior years." According to a survey by AAA, the average price of regular unleaded gasoline was $3.365, up 20% from last year, with many expecting $4 per gallon in some places this summer."

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