NCPA - National Center for Policy Analysis


April 4, 2008

The United States has long prided itself in being the breadbasket of the world and Americans have traditionally paid a smaller share of their income on food than citizens of other developed countries.  But the days of cheap milk, bread, beef and poultry may well be over -- and Uncle Sam is partly to blame, says columnist Linda Chavez.


  • In 2007, the cost of a gallon of milk increased 26 percent; eggs went up 40 percent; and a loaf of white bread went from $1.05 to $1.28 from 2006 to 2008.
  • Steep increases in the price of oil have contributed to these higher costs, but the federal government has played a pernicious role as well.
  • By mandating that oil companies increase the amount of ethanol they blend with gasoline, the government has not only artificially increased the cost of corn, which is what most U.S. ethanol is made of, but has driven up the cost of other grains as well.

Inflated corn prices encourage farmers to divert more acreage to corn, which means they plant less soy and wheat, which, in turn, drives up the prices of those commodities: The aggregate price of wheat, corn, soy oil and soy meal in the United States will be $61.7 billion higher in the 2007-2008 crop year than it was in 2005-2006.  Corn is also a common grain used in feed for cattle, poultry and hogs.  As a result, prices for meat and poultry are going up, but even with higher prices some companies in the meat industry still can't make a profit and many are being forced to cut jobs and close plants.

Matters will only get worse as government mandates higher bio-fuel content in U.S. gasoline from the current 9 percent to 15 percent by 2015.  Ethanol won't solve the energy crisis, but it may well lead to a food crisis in the United States and elsewhere, says Chavez.

Source: Linda Chavez, "Seeding the Food Crisis," Washington Post, April 1, 2008.


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