Always read to the end of the report; that’s where the good stuff is. Case in point an obscure little stat was released on Friday with the not-quite-tantalizing title “Agricultural Prices”. Tables and tables of words with numbers after them – soybeans, price per bushel – wheat, percentage change year over year – imported fruits…exported nuts…you get the idea.
If you do the shopping for your family as I do (don’t snicker, I also chop down trees and bench 300), you’re probably not surprised to find out that agricultural prices rose quite rapidly in May. In fact the monthly price changes are beginning to look disturbingly like annual price changes. This is not good. But the really interesting stuff is in the details. Foods seem to be rising in price in direct proportion to their proximity to ethanol subsidies. Feed grain is up an amazing 41% in the past year. Fruit and nuts are down 3% over the same period. Why? Because we turn corn into ethanol, but we don’t do the same with walnuts or bananas.
Here in the center of the world economy, this means high food prices. Out at the edges, it means famine. When food gets expensive here, we tap into a little more credit, or perhaps skip restaurants for awhile. When food gets expensive in Malaysia, they riot in the streets. When food gets too expensive in Cape Town, some men take to the streets in violent roving bands, maiming and murdering refugees who’ve come from other countries in search of something to eat.
You’ve heard the arguments, some put forward, sadly, by some in this administration, by their big business welfare queens in the corn states, and by ultra-smug wing of the environmental movement. They say that very little of the jump in food prices comes from ethanol, that it’s mostly energy prices, or a weak dollar, or general inflation. This is why we have to read to the end of the report, so that we can recognize nonsense when we hear it. Why would general inflation cause corn to a rate of doubling every two years, and yet leave meat, fruit, nut and some vegetable prices dropping? How could high energy prices do that? Don’t vegetable farmers use tractors? Don’t sugar farmers fuel their tractors with the same diesel? Don’t the trucks and trains which deliver almonds run on the same kinds of fuel as the ones which deliver grains?
Of course they do.