Suffering from the Ethanol Hangover
Like all policy choices, the decision of many developed nations to pursue greater conversion to ethanol and biodiesel has consequences. But who will pay the costs associated with the shift from oil to biofuels? According to the World Politics Review, it is the world’s poor who are going to suffer the most from the negative effects of the biofuel craze.
With current technology, almost all of the biofuel produced today has to be made from corn or soybeans. Though other sources may be able to be used in the future, the use of crops for fuel rather than food has already taken a huge toll on the world’s commodity markets. The UN Food and Agriculture Organization estimates that global food prices have increased by almost 40 percent in the last year, after a 14 percent increase in 2006. Many countries have introduced price controls on staple foods, and food shortages have caused protests in Pakistan and Indonesia.
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Ethanol's Failed Promise
A recent article from the Washington Post argues that US "food-to-fuel" programs have failed on all counts - they have harmed the environment, distorted agricultural markets, and failed to reduce U.S. dependence on foreign oil. The authors argue that Congress should recognize that food-to-fuel programs have failed, learn from its mistakes, and work towards different and better policy solutions.
Food prices hick
It is a current scenario. The understanding of hick in food prices which needs a clear focus on 3 clear facts:
1. The rise in the number of people globally migrating from vegetarian to non-vegetarian.
Opportunity cost of eating meat:
This is creating a problem as people have to feed more & more cattle for getting meat which creates a abundant demand for food grains than what is actually has to be when there are only human eaters of food grains. This leads to a lag in supply of grains when the real demand in the market is increasing.
2. Bio- fuel production
The continuous decrement of oil resources have lead to a huge use of wheat for preparing ethanol which quantifies as 1Gallon of ethanol produces = 1 persons food/year.
3. Transportation hick
As the oil reserves are getting exhausted which is leading to a huge & non-linear increment of transportation costs as well as when all the inputs for agriculture is increasing which makes the farmers cry for huge remuneration and this is another reason why there is a rise in food crisis in the world.
Now every Govt. should be in a position to analyze all the above three preliminary ground level factors & take necessary steps. At least if not that the govt.'s can stop people from eating meat at least the frustrated govt.'s should break for a while to peace & take some adequate fiscal steps to escape the food crisis.
"Atleast now the people who are holding the control over the oil stocks realize that the oil they hold will no longer lubricate or fuel them for speculative capital inflows but for their atrocity getting killed by the sharp knife over which they are sitting".
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