What's behind the current food shortages: Is the increase in ethanol production to blame or is hoarding the problem?As world rice prices set new records daily, the World Bank has warned that the crisis could further impoverish 100 million people (BusinessWeek.com, 4/25/08). What's behind the current food crisis and what can the world do to dig itself out from the problems? Here are a few of the key issues to consider.
Has the increase in corn cultivation for producing ethanol in the U.S. and Europe affected the price of rice?
Yes, indirectly. As farmers in the U.S. and Europe plant more corn in place of wheat to produce ethanol, the price of wheat has risen as supplies have tightened. Faced with higher wheat prices, people are substituting rice in their diets, particularly so in Africa. And, of course, the demand for ethanol as an alternative fuel is linked directly to the soaring price of oil. Moreover, the cost of rice production has increased significantly because fertilizer, transportation, and processing costs have shot up along with skyrocketing oil prices
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