Concerns over ramping up ethanol production

source: RFA

Lester Brown of the Earth Policy Institute in an interview at Foreign Policy argues why we should watch trends in ethanol production that might affect the price of corn:

The ethanol advocates like to say “we don’t eat much corn,” which is true. But in Mexico and some Central American countries, it is the food staple. It’s even more important as a source of feed. Our refrigerators are stuffed with corn: milk, eggs, cheese, chicken, pork, beef, yogurt, ice cream—these are all corn products.
...
What’s actually happening in the world now is that the price of grain is moving up towards its oil equivalent value. That means that the price of grain is now being set by the price of oil. If at any time the food value of a commodity is less than the fuel value, the market will move it into the fuel economy—that’s what the market does. So if the price of oil jumps from $60 to $80, the price of food will also jump. I don’t think most people realize yet that the price of oil is going to dictate the price of food.

I don't know enough about the global food and energy economies to confirm or deny this claim, but I'm skeptical that the price of oil would "dictate" or "set" the price of food more than it would just "affect" the price of food like a lot of other variables.  Anyone else have a better sense of this?

Comments

[/pd]

yes corn crop is critical.. I posted pointers here

http://peterdawson.typepad.com/scmv20/2006/03/cornfield_issue.html

[Joseph Youker]

There is no competition between food and oil because it's obvious that humans value food more than oil. Obviously.