This interesting story may be of relevance to my earlier biofuels blogpost.
NEW YORK (CNNMoney) — Food prices have been rising worldwide, as the cost of raw materials and agricultural products surge, contributing to political unrest around the globe.
In December, international food prices broke an all-time high when they rose 25% for the year, led by rising costs for staples like rice, wheat, and maize, the United Nations reported.
The sharp rise in food prices, in particular, has become “a source of political instability,” New York University economist Nouriel Roubini, told CNNMoney’s Poppy Harlow, at the World Economic Forum in Davos, Switzerland this week.
Roubini, nicknamed “Dr. Doom” for his famously bearish predictions, said spiking energy and food prices pose one of the greatest global threats — especially to emerging market economies.
Why prices are rising: Bad weather in Australia and Russia over the summer severely diminished wheat crops, partially fueling the latest commodities surge.
Rising incomes in emerging markets like China and India also play a role, analysts at the Eurasia Group say. The growing middle class in those countries has prompted a shift from a grain-based diet to one consisting of more meat.
And a push toward biofuels has also led to rising demand for corn and sugar, pushing up commodity prices.
Now we can’t blame Biofuels for all of this, of course, but if biofuels become a primary source of fuel oil, then the impact will become radically greater as biofuels become as, or more profitable than staple crops.
And that’s a major, major disaster just waiting to happen, as it will put food prices, especially for the third world, on a direct collision course with fuel prices.
“Let them eat cake” was never said in reality, but the fact that it has become so resonant with the idea of short sighted leaders marching towards disaster should make it apparent just how bad the modern biofuel version of that would be: “Let them Drink fuel.”