Why Your Grocery Bills are Going to Soar

By David L. Brown

Are you just getting used to paying up to three dollars a gallon or more for gasoline? Well, hold on to your wallet because food prices are about to take off too — and it’s no coincidence because issues relating to energy are now driving up grocery bills with possibly no end in sight.

There are several reasons for that. It takes a lot of energy to grow and process food, perhaps more than you realized. About ten percent of all the energy used in the U.S. goes to the farm and food industry, and as in so many other cases that energy is not used very efficiently.

A 2002 study by the Johns Hopkins Bloomberg School of Public Health calculated that on average our farmers use three calories of energy to produce only one calorie of edible food. And that’s just down on the farm. When the energy used for transportation and processing are added in, our food industry consumes seven to ten calories for every calorie that ends up on our dinner plates.

We see those giant tractors and combines tearing across the land to plow, plant, cultivate and harvest crops, each one burning gasoline or diesel fuel at a phenomenal rate. But that’s only the tip of the iceberg, because an even bigger use of farm energy goes to make the artificial chemicals used to fertilize the soil and control insects and disease. Petroleum and natural gas are major feedstock sources for the agri-chemical industry, and a lot more energy —about 40 percent of total on-farm use —is consumed merely to produce fertilizer and pesticides.

Transportation costs are another important reason why your grocery bill is bound to grow and grow, especially in our era where it is considered normal to enjoy fresh fruits and vegetables the year around. According to an article on the BBC news website, our food is traveling farther and faster with each passing year, racking up “food miles” just as a business traveler logs air miles. When you are enjoying a bowl of juicy strawberries in February, they were likely flown in from New Zealand or Peru in a jumbo jet. When oil prices rise, so does the cost to fly those planes — and the costs are passed right through the grocery store into your family budget. Costs rise all down the line and it is we consumers who end up paying for them.

But that doesn’t even begin to tell the whole story of how energy costs are driving food prices higher, because a mad rush is on to turn valuable farm crops into artificial gasoline and diesel fuel. All across the country distillery plants are springing up to turn corn into ethanol, an alcohol fuel. Others will convert soybeans into so-called “biodiesel.” Rising oil prices have created new competitors for your grocer as the makers of fake fuels bid up the price of grain that would otherwise contribute to our food supply. You can’t blame the farmers, because government subsidies and the urge to make a bigger profit are compelling.

A recent survey by the Earth Policy Institute identified 116 ethanol plants that are already in production, another 79 under active construction, and 11 more existing plants that are being expanded. That surge of activity means that by the time the 2008 crop is harvested as much as 50 percent of America’s corn may be going into ethanol plants instead of to cattle feeders, dairymen, pork producers and poultry farmers. Already the demand has pushed corn prices up significantly — from around two dollars a bushel to approaching four dollars — and the sky’s the limit on how high prices may go as the ethanol craze takes off.

Crop planting estimates for 2007 were announced March 30 by the U.S. Dept. of Agriculture, and unsurprisingly they show that farmers intend to plant more corn to cash in on the ethanol bonanza. Corn acres are predicted to rise by 15.5 percent to the highest level since World War II. Farmers are counting on all those new ethanol plants to pay premium prices for that corn. All others will be forced to bid against the fake fuel producers.

And it isn’t just corn prices that are going to shoot up. Even as biodiesel plants are being built to convert soybeans into fake diesel fuel, farmers intend to plant 11 percent fewer acres of beans this year. Wheat, grain sorghum, and barley plantings are also likely to drop and according to the Agriculture Dept. report cotton plantings could fall more than 20 percent as growers switch acres from cotton to corn. The result: shorter supplies and higher prices for all these commodities.

These developments will not only cause our grocery bills to skyrocket, they will also deprive America of one of our most important exports. In recent times U.S. farmers have been raising 40 percent of all the corn grown in the world and America is the source of 70 percent of the corn traded internationally. What will it mean for the buyers of that grain to feed their livestock and people as we divert the precious crop to making fake fuel? Foreign nations will be bidding against ethanol and biodiesel producers as their hungry populations grow restless. Rising corn prices have already caused riots in Mexico City due to higher prices for tortillas, most of which are made from U.S.-grown corn.

If that is a litmus test for the future, how big a problem will this be by next year when the ethanol mania is in full bloom? The diversion of corn and soybeans to fake fuels is tragic, because those grains are needed to feed a world in which too many people are already going hungry. Food riots are bound to become common events in the Third World — and I wouldn’t be surprised to hear some loud screaming right here at home as grocery prices skyrocket.

All of this will hit the fan just in time for the next elections, so our political policy-makers should prepare for interesting times ahead as they face angry consumers at home and outraged trading partners abroad.

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