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Published January 19, 2008, 12:00 AM

Biofuels versus food debate

The food versus fuel debate continues to raise its head as corn, soybean and vegetable oil prices have continued to soar higher. The American consumer really hasn’t noticed much of an increase in food prices and probably won’t. We spend about 10 percent of our income on food. That is very low relative to nearly every other country and rock bottom compared to poor or lesser developed countries.

By: Mike Krueger, The Jamestown Sun

The food versus fuel debate continues to raise its head as corn, soybean and vegetable oil prices have continued to soar higher. The American consumer really hasn’t noticed much of an increase in food prices and probably won’t. We spend about 10 percent of our income on food. That is very low relative to nearly every other country and rock bottom compared to poor or lesser developed countries. People in India spend nearly half their income on food. The country has liberally applied technology to end the famines that devastated the nation in previous decades, but their prime minister recently warned that prices for basic foods will be rising as the country approaches a deadline for mandated use ethanol.

The food and livestock industries in this country believe biofuels mandates will devastate their industry, but when Congress recently expanded the mandate its only acknowledgement of these concerns was to mandate a study of the potential “unintended” consequences.

With food requiring just 10 percent of American income at the same time energy imports are worrisome, it is biofuels and not food that gets the political nod. One estimate is that just 1 percent of global agricultural area is planted to biofuels crops whereas a drought in a major production area, like Australia, can have a much more substantial impact on prices.

It is also clear that Americans are more worried today than a year ago about food and product safety with all of the issues surrounding problems with imports from China. In short, the food versus fuel debate will continue into 2008 but unless there is a huge crop disaster situation that forces prices sharply higher it’s unlikely anyone in Congress will want to alter the push toward biofuels.

Krueger is the host of “The Money Farm,”

a syndicated radio and television program on grain marketing and is a licensed commodity

broker. He can be reached by e-mail at

mike@themoneyfarm.com.

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