You're probably already aware of this, but a front page article in today's (Jan. 27) issue of The Washington Post describes how the price of corn tortillas -- a staple in the diet among poor Mexicans -- has soared because of increased ethanol production.
Corn (among other things) is used to produce ethanol here in the United States. Our Congress -- under pressure from Midwest farmers and such agricultural interests as the Archer Daniels Midland Corporation -- has mandated that ethanol be used as an additive in gasoline to "reduce our dependence on foreign oil."
An admirable goal, but with unintended consequences. Using corn to produce ethanol has -- as predicted by myself (in an earlier post) and others -- has raised the price of corn. This is good for Midwest farmers and Archer Daniels Midland. Not so good, though, for eaters of corn-fed beef, drinkers of bourbon . . . or poor Mexicans who depend upon tortillas for food.
The Post article states that tortilla prices have tripled or quadrupled in some parts of Mexico, prompting the Mexican government to implement price controls on tortillas.
As with all such measures to control prices (the price of corn -- as well as oil -- is determined by the world market) this will inevitably lead to shortages making the situation worse. Tortillas will be cheap . . . when they are available.
Worse, as we have discussed on this board, ethanol produced from corn results in an overall increase in energy use.
This situation may be somewhat alleviated if and when a cheap and energy-efficient method (such as with biotechnology) of producing ethanol from materials other than grain is developed.
But if such a method is developed, what do you suppose will be the reaction of Midwest farmers and the Archer Daniels Midland Corporation?
Corn (among other things) is used to produce ethanol here in the United States. Our Congress -- under pressure from Midwest farmers and such agricultural interests as the Archer Daniels Midland Corporation -- has mandated that ethanol be used as an additive in gasoline to "reduce our dependence on foreign oil."
An admirable goal, but with unintended consequences. Using corn to produce ethanol has -- as predicted by myself (in an earlier post) and others -- has raised the price of corn. This is good for Midwest farmers and Archer Daniels Midland. Not so good, though, for eaters of corn-fed beef, drinkers of bourbon . . . or poor Mexicans who depend upon tortillas for food.
The Post article states that tortilla prices have tripled or quadrupled in some parts of Mexico, prompting the Mexican government to implement price controls on tortillas.
As with all such measures to control prices (the price of corn -- as well as oil -- is determined by the world market) this will inevitably lead to shortages making the situation worse. Tortillas will be cheap . . . when they are available.
Worse, as we have discussed on this board, ethanol produced from corn results in an overall increase in energy use.
This situation may be somewhat alleviated if and when a cheap and energy-efficient method (such as with biotechnology) of producing ethanol from materials other than grain is developed.
But if such a method is developed, what do you suppose will be the reaction of Midwest farmers and the Archer Daniels Midland Corporation?
Comment