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Unintended Consequences - the high price of corn

Corn prices have shot up because the US Government is subsidizing corn-based ethanol production for use as a fuel even though the process is barely break-even if that. Now, from the NY Times (use bugmenot for registration), the high price of corn means that the US entities that provide food to poor people are buying and giving out less. Here is the article:

As Prices Soar, U.S. Food Aid Buys Less
Soaring food prices, driven in part by demand for ethanol made from corn, have helped slash the amount of food aid the government buys to its lowest level in a decade, possibly resulting in more hungry people around the world this year.

The United States, the world’s dominant donor, has purchased less than half the amount of food aid this year that it did in 2000, according to new data from the Department of Agriculture.

“The people who are starving and have to rely on food aid, they will suffer,” Jean Ziegler, who reports to the United Nations on hunger and food issues, said in an interview this week.

Corn prices have fallen in recent months, but are still far higher than they were a year ago. Demand for ethanol has also indirectly driven the rising price of soybeans, as land that had been planted with soybeans shifted to corn. And wheat prices have skyrocketed, in large part because drought hurt production in Australia, a major producer, economists say.

The higher food prices have not only reduced the amount of American food aid for the hungry, but are also making it harder for the poorest people to buy food for themselves, economists and advocates for the hungry say.

“We fear the steady rise of food prices will hit those on the front lines of hunger the hardest,” said Josette Sheeran, executive director of the United Nations World Food Program. The United States is the biggest contributor to the agency.

And to those fine folks at Archer Daniels Midland, a hearty fuck you for lobbying for this subsidy. Hat tip to Glenn at Instapundit for the link. Posted by DaveH at September 29, 2007 1:57 PM | TrackBack