Why food prices are rising

Opinions abound on what's causing the cost of food to go up.

Oil is not only driving up production and transportation costs, but also adding to demand for corn and soybeans, used to make alternative fuels such as ethanol and biodiesel, a recent article in The Boston Globe reported. As a result, corn prices have more than doubled in commodity markets over two years, and soybeans nearly tripled, according to DTN, a commodities analysis firm in Omaha interviewed for the article.

Meanwhile, with poor harvests in major wheat-producing regions, wheat prices have more than tripled, The Globe article stated. These crops have a profound impact on food prices because they form foundations for many products, including oils, sweeteners, and flour, the article went on to say. Corn, for example, is a key ingredient in livestock feed. When the price of corn rises, so does the price of feed, and ultimately, so do the prices of meat, poultry, and eggs.

However, the American Farm Bureau states that petroleum-based energy is the primary factor driving domestic food prices. Forty-four percent of rising food costs is due to energy costs.

Bureau President Bob Stallman said at a recent news conference that ethanol is “not the culprit that American consumers are being led to believe,” and he stressed that renewable fuel and affordable food can coexist.

In addition, Stallman said world food prices are escalating because of other complex issues such as growing world demand, particularly in nations such as China and India, as well as lower supplies due to droughts elsewhere in the world.

But suspicions are being raised that big agriculture is taking advantage of the rising cost of oil to make big profits for corporations and their leaders.

The rise in food prices has been linked to several factors, including bad weather, the higher price of oil, and the diversion of crops to produce biofuels for cars, a recent report on Democracy Now stated. The growing unrest over food security comes as major agricultural companies are posting record profits.

The grain-processing giant Archer Daniels Midland recently announced a 42 percent rise in third-quarter profits, according to the Democracy Now article. Revenues from the distribution of grains including wheat and corn were up 700 percent. Other major firms, including Monsanto, Deere, and Mosaic, have all reported similar windfalls.

And so it goes.