Rising Oil And Food Prices Are A Vicious Cycle

The Free Press    April 24, 2008

With Additional Text

Haiti's parliament just dismissed the prime minister after deadly protests. There have been street riots in Mexico, India, and Indonesia. China and Russia have slapped on new controls. Are these political uprisings? Revolutions? Human Rights demands? Nope - just frustration over the worldwide surge in the cost of basic food. And if you thought that runaway petroleum prices only affected your car, chew on this...

"We apologize for recent price increases" reads the sign over the bread counter, "but they are due to the global factors beyond our control". This is not a food stall in a third-world country, but an upscale supermarket in Nebraska, where the farming system once produced mountains of surplus grain.

Those mountains are gone now. The world's grain supply is down to its lowest point in decades, and food prices are up around the globe. Italians boycotted pasta for a day last September in protest of a seven percent price hike. Americans are feeling the pinch of 15 percent increases for bread, and 19 percent for milk. Eggs are up 35 percent since last January. Tomatoes are up 25 percent, and PA's largest tomato grower has switched entirely to field corn.

Get set for more, and worse. Wheat, which was selling at less than six dollars a bushel in mid-2007, is now almost $12. Corn is up a whopping 70 percent in six months. The U.S. Department of Agriculture reports that the all-food Consumer Price Index increased four percent between 2006 and 2007, the highest annual increase since 1990, and is already up 4.4 percent again this year. This is due, in large part, to record prices for oil. Food production the world over requires massive amounts of oil, for everything from manufacturing fertilizer to shipping grain and cattle to producing plastic wrap and containers. It is no coincidence that as oil topped $100 per barrel, crop futures hit all-time highs. And with soaring oil consumption in the Middle East driving gas prices toward four dollars a gallon, food prices are unlikely to fall anytime soon.

Ironically, some of the new technologies we are embracing to cut our dependence on fossil fuels are actually making the food problem worse. Like our latest obsession with ethanol, made from corn. President Bush's ambitious, shortsighted goal, announced in his last State of the Union address, is to have the U.S. producing 35 billion gallons of ethanol by 2017. More than 100 ethanol plants are under construction. This may some day make a dent in fossil fuel usage, but the price we pay is the huge boost in demand for corn, pushing up food costs across the board. Remember that PA former-tomato grower?

Of course, as corn goes up, many other products go with it. In Mexico, which gets much of its corn from the U.S., the price of tortillas has doubled in the past year, setting off those large protest marches in Mexico City. For American producers, the impact was felt first in animal feed, particularly for poultry and pork, which is about two-thirds corn. Add in skyrocketing shipping costs - oil, of course - and consumers are now shelling out far more for eggs, chicken, turkey, and pork products. Next will be corn syrup, then soft drinks, candy, and anything else that uses corn syrup as sweetener. Breakfast lovers will be hit with a grand slam - eggs, bacon, pancakes and french toast, syrup, milk, and coffee are all on the rise.

But we have a more fundamental problem: there is just not enough land to grow all we need for both food and fuel. Worldwide, there isn't much unused arable space. Just look around Upper Bucks. What used to be planted fields is now housing, shopping centers, parks, schools, and, yes, open space. In other words, civilization. Now imagine this on a global scale. Population growth adds an estimated 200,000 mouths a day - much of it in places where the shortages are already the greatest. Growing prosperity in India, China, and elsewhere is boosting demand for meat and other animal products, and it takes two to six pound of grain to produce every pound of milk, meat, or eggs.

With no reasonable expectation of more land to plant, any substantial increase in crop production will have to come from a better yield per acre. Yet, for decades, yields have grown by an average of only 1.5 percent per year, not nearly enough to keep up with world needs. And, as climates change, it may be hard even to maintain current yields.

The logical answer is agriculture research and development. That is what produced those mountains of grain in previous years. But, again, we are victims of our own shortsightedness. While we concentrated on producing larger, fancier plasma televisions, smaller touch-screen cell phones, and Ipods that can store the music of a lifetime, we never planned for the day when we would outgrow the technology that accumulated our bountiful glut of grain. We cut back major government funding for agricultural research as we turned our attention, and resources, to the environment, space exploration, and, of course, the military.

Now we face 21st century problems with mid-1900's technology, and with every available tax dollar being diverted to either Middle America rebates or the Middle East fiasco. The billions that could be plowed into agriculture are, ironically, securing our oil flow. And, like the Nebraska supermarket, all we can do is apologize for recent price increases.

"Every Little Thing You Do"

This past week, Vic Stevens explained why he withdrew his defamation lawsuit against TFP, and this column, which grew out of a 2005 article that quoted Centennial School District documents critical of him. Stevens maintains that the district's official records were not true, but that his two main witnesses "are both dead". That excuse is somewhat surprising, since, before he even filed the suit, he knew that those people had been dead for many years. It is equally surprising that he referred to them as "his" witnesses, since they were the ones who made the negative comments about him.

Stevens' attorney, Larry Otter, had explained things a bit differently. He wrote on February 29 that if the statements in the column matched the Centennial records, "...it would appear that truth is an absolute defense and the matter will be withdrawn with prejudice" (can not be reinstated). It was.

Stevens also accused this column of taking "every little thing you do and tell(ing) half of it". In one respect, he is correct. I do take "every little thing you do and tell half of it". The half that Stevens, and certain others, don't want you to know. In fact, that is the entire point of The Silent Majority. Political candidates, elected officials, school board administrators, and a former borough manager tell you only what is in their best interests. And newspaper reporters rarely have the time and resources to fully investigate the issues. It is just not their job.

But the Silent Majority seeks out the half that isn't said. The half that would remain buried in documents (like Centennial), the half that you would never learn. And if I do reveal "every little thing", then I have done my job well.