Redstate

Ethanol is at best a short term stop gap until this nation gets past the anti-everything where coal, nucs. and oil are concerned. We can and must produce our way to a point where we can tell the oil ticks to eat their crude.
It is impossible to 'conserve' your to a growth economy - Some of the Eco-socialists know this and the radicals are using every means "global warming', etc to destroy this economy, free markets and private property.

That having been said this caterwauling about 'food inflation' is ignorant of the history of food prices and household income.
FOR THE RECORD -
In the early 1930's in the US about 30 -35% of disposable household income was spent on food. Today the average household spends 7-11% of disposable income on food!
The New Deal and most of the subsequent Federal idiocy has been a disaster for the rural US.
If you doubt this look at the population flight numbers for counties in the US that are Ag dependant . The goal of the FDR 'Save the small farm" crap was NEVER about saving the small farms !
Basic Econ 101- anytime you establish a price floor above the market price (subsidies) you encourage over production and drive DOWN long term prices. AT the end of WW II (summer 1945) corn was $2.45 per bushel and until very recently has traded within $1.00 of that plus or minus - do the math ! Most of the other commodities followed the same path.
The cost savings brought about by the most efficient food production system in the world - US Production AG- went straight to the pockets of consumers .
The goal of the socialists was / is to keep food prices low so that households had more to spend on housing, transport., entertainmnet and TAXES !!
So please don't be Bit@@ing about 'food inflation' with a full mouth .

This will go down in finance and business history as a watershed year, a simultaneous inflection point for several major long-term trends. (Not to mention a nearly-perfect analog of the 1998 Long-Term crisis, except this year we played it with live ammunition instead of blanks.)

Food-price inflation is running well-above trend in every major economy in the world, with the US finally showing serious signs of it just in the last several weeks.

Pejman talks of the ethanol effect. My gut is that this is effect is real but overrated. There has also been a rash of bad weather in agricultural zones all over the world, from wheat in India to hog farms in China to coffee plantations in Vietnam to soy fields in the US. Add high and growing demand from emerging economies, and you have a perfect storm.

I'm still trying to verify my numbers, but a very rough back-of-the-envelope calculation would appear to indicate that the entire US grains-and-cereals industry is somewhat smaller than the US Dept. of Agriculture. Let that sink in for a moment.

Food-price inflation has policymakers petrified in China (which is frantically using their captive banking system to suck oxygen out of their economy), Japan and Europe (where central banks have foregone desired interest rate cuts), to the US (where the Fed disappointed markets last week by keeping rates higher than expected).

The outcome for the developed economies may be a form of stagflation.

Be wary of arguments that the US can sustain our economy with expanded food exports to a hungry developing world. As my thought experiment shows, there's not enough economic value in agriculture to pull us out of a slump, if we indeed are in a slump.

it has to play a role, it is supported by a goverment (our money) price floor. This causes an unnatural supply based on an annatural demand. The supply of corn has increased while the supply of other crop alternatives has decreased. For example, ask a rancher or farmer what they are paying for hay. Even hay has skyrocketed because everyone is planting corn to get on the government largesse.

There is another, even more important reason why grain prices are rising. As the third world becomes wealthier, their is a correlative increase in demand for beef/meat. The funny thing is, a pound of meat requires more corn/grain than a pound of grain/corn. Think about it, as countries begin to eat more animal protein and less grains, they actually require MORE grains! And of course the cost of beef goes up because of demand and the increased price of inputs.

Molon Labe!

It is good to be the Saudi Arabia of food.