Eat more or drive more?

CHINA WATCH Recently, my mum has been moaning a lot, because the price of vegetables, pork and egg have never been so high. Everyday she complains about how much money she has to spend on meals, while the price of pork, especially, has been rocketing upwards. What she doesn’t know is that her car’s fuel is causing a surge in the price of pork.

According to Food vs fuel wars just beginning, an article in China Daily, the growth of the biofuel industry in developed countries is pushing up demand for corn and soy, thus resulting in sharp rises in the price of grain in the international market. These price rises have, in turn, spilled over into the domestic market, affecting the cost of goods, such as milk, cooking oil–and pork.

I read all this to my mum, who quickly settled her priorities: “Of course food comes first. What’s the point of keeping a car if I’m not alive.” The article came to a similar conclusion:

This inflation initially hit countries like China, India, Mexico and the US, containing 40 percent of the world’s population. In China, compared with last year, January pork prices were up 20 percent, eggs up 16 percent. Food prices rose 3 to 4 percent just in the month of May compared with the corresponding period last year. So there is direct competition between the 800 million people who own automobiles and the world’s poorest 2 billion. Basically there is now a link between the food industry and the energy industry.

When the market sees that it is more profitable to produce ethanol than sell the grain for food, the food industry will be in trouble. Since ethanol is used as a fuel, its price will be tied to the price of oil. As oil prices climb because of the impending world shortage of oil, ethanol prices will rise. As a consequence food prices will rise as well.