the cost of oil, the cost of calories

When oil prices began rising, we knew it was just a matter of time until food prices began rising as well. Our current system, which relies so little on local production, is incredibly dependent upon shipping and trucking. (It’s also worth noting that modern farming itself is incredibly reliant on synthetic, oil-based fertilizers.) And this isn’t just true in America. Most geographic regions, having chosen to focus on certain profitable crops, have become incredibly dependent on food imports. Large farms throughout the U.S. that historically produced among the most diverse crops in the world now just churn out only corn and soybeans. Everything else, we’ve come to expect, can be brought from elsewhere at little expense. Well, now that oil prices are rising, the economics are shifting, and we’re beginning to feel the ramifications. The following is a clip from today’s “New York Times”:

Rising prices for cooking oil are forcing residents of Asia’s largest slum, in Mumbai, India, to ration every drop. Bakeries in the United States are fretting over higher shortening costs. And here in Malaysia, brand-new factories built to convert vegetable oil into diesel sit idle, their owners unable to afford the raw material.

This is the other oil shock. From India to Indiana, shortages and soaring prices for palm oil, soybean oil and many other types of vegetable oils are the latest, most striking example of a developing global problem: costly food.

The food price index of the Food and Agriculture Organization of the United Nations, based on export prices for 60 internationally traded foodstuffs, climbed 37 percent last year. That was on top of a 14 percent increase in 2006, and the trend has accelerated this winter.

In some poor countries, desperation is taking hold. Just in the last week, protests have erupted in Pakistan over wheat shortages, and in Indonesia over soybean shortages. Egypt has banned rice exports to keep food at home, and China has put price controls on cooking oil, grain, meat, milk and eggs…

With all of this in mind, you would assume that American politicians would be working overtime to see to it that farm production is relocalized. Unfortunately, I don’t believe that’s the case. From my reading of the recent Farm Bill, which I admit was quite cursory, it seemed as though nothing had changed. We were continuing the tradition of supporting our agribusiness, factory farming infrastructure instead of looking to support regional networks of organic farms, etc. Clearly, the current system, so desperately reliant on fossil fuel, is not sustainable. But, in spite of this, it doesn’t seem as though any of our leaders has the courage to say so. The agrilobby, it would seem, is much too strong.

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2 Comments

  1. John on Forest
    Posted January 20, 2008 at 4:47 pm | Permalink

    What we need is a clear thinking legislature that makes tax policy to encourage the best solutions for our country regarding energy independence, competition within the global economy, and economic development within our country.

    Clearly, that doesn’t happen when lobbies and big money cloud the minds of our congress.

    Some subsidies are definitely out dated, e.g. corn. Some may not be.

    The demise of family farms is a tragedy for the individuals involved. It may also be a tragedy for our country economically. Farm subsidies are only partly to blame for the demise of family farms though. Inheritance taxes are the other government derived reason that small farms are sold to corporate farms.

    The USA has historically been an exporter of foods. Even today, agricultural exports are a bulwark of US exports, keeping us from diving even deeper into the trade deficit. What congress must keep their eye on is maintaining policies (not status quo policy, but evolving policy) to make the production of food profitable AND economical to consumers.

    I’m not convinced that corporation agriculture is less efficient. Scales of economy usually do result in efficiencies. I believe economics will be the force that keeps things in balance, long term, assuming government subsidies/taxation don’t monkey wrench it. As long as bananas sell for 49 cents a pound I’m going to buy them. When the cost of energy to transport them results in bananas at 139 cents a pound, I doubt I’ll buy as many.

    But, a new equation has emerged now regarding food prices. When our energy came from fossil fuels, food prices were only linked in a minor way to the cost of fuel. But, now, food is a source of fuel and the linkage between food prices and energy prices has suddenly become more directly linked. The only way that we will continue to have cheap food will be to decouple food and energy prices. That is why I favor non-agricultural solar, wind, water, nuclear, and geo-thermal energy. I also support expanded use of fossil fuels (i.e. coal and shale oil) if technologies to sequester CO2 can be developed.

  2. egpenet
    Posted January 21, 2008 at 3:24 pm | Permalink

    Kunstler was right about this, too.

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