Connection between food & oil- closer than you think!
Aug. 13th, 2007 by Al
The tangled web of oil and food
What do a rich oil baron and a famine sufferer have in common…they are both very affected by the price of oil.
Food commodities prices have risen by 21% in the last year, and this is causing some disruption to the funding for, and therefore delivery disruption of badly needed food aid to many of the world’s poorest nations. The reason for this dramatic jump in food costs is the rising price of oil.
With the political instability of foreign oil as well as the skyrocketing pricing, nations, notably America as well as the EU, have been pushing for far greater ethanol production, and in the case of the EU, have even mandated a certain percentage of ethanol in all fuel. Since ethanol and bio diesel are produced largely from commodities staple products like palm, sugar cane and corn, this means that demand for these commodities has risen, and prices have gone up.
Experts warns that these so called greener alternatives may not look so green once demand rises to a level that has poorer South American and Asian farmers clearing large swathes of rainforest to grow massive amounts of fuel purposed commodities, and in addition to the ecological impact, these poorer nations may also see price increases in domestic food costs. These large commodities plantations, generally the domain of rich plantation owners and bio fuel corporations, do not create wealth distribution to the masses, and as a result the higher commodity prices on food will not be offset by a proportional gain in earnings from the sale of these domestically produced commodities.
Absurdly, many of the recipient nations for food aid are also the poorer nations courting bio fuel agro businesses. These bio fuel plantations change food crop production to fuel crop production and reduce the natural biodiversity, and thus the natural food sources. These bio fuel plantations drive the prices of domestic food commodities up, thus increasing their relative national need for food aid, but at the same token by participating in the bio fuel business, they also increase the prices for donor nations, and as a result will likely see less total food aid.
Bio fuel may well cause a higher demand for food aid in the countries producing the fuel crops, and because they are producing these fuel corps, they have driven the prices up, and as a result will get less aid.
The price of oil weaves a tangled web of influence, and it certainly doesn’t stop at the gas pumps.
No comments yet.