Cheap food versus expensive oil

You can’t have cheap food and expensive oil. It just doesn’t work. The price of food is making worldwide headlines. For hundreds of millions of people who earn only a dollar or two a day, increasing prices for staple foods like grains, pulses, rice and cooking oil is a big deal. The ethanol industry, particularly in the U.S., is a prime target of those who worry about food prices. About 37 per cent of the American corn crop goes to making ethanol. Cancelling the ethanol incentives is seen as a way to increase the food supply and drop prices. There are several faults with that logic. Less ethanol means even more upward pressure on oil prices, which in turn increases food costs. Expensive fuel adds significantly to the cost of food processing and transportation. Besides that, if you cut ethanol production and grain prices drop, grain production will also decline. As production becomes unprofitable, there’s no incentive to spend money on new varieties and extra fertilizer. So while it might be a short-term fix, cutting American ethanol production wouldn’t likely have a long-term dampening effect on food prices in poorer nations. It’s an interrelated world. You can’t produce cheap food with elevated oil prices, at least not for the long term.

I’m Kevin Hursh.

DynAgra, an independent Western Canada-based Company, is dedicated to providing growers with the tools to manage the risk and maximize the profitability of their farm business through the continued innovation of agricultural products and services. We are committed to developing and providing growers with the latest in precision agronomics, variable rate technology, soil fertility, crop protection, fertilizers, custom application and financial solutions.