Ethanol vs. Hunger

I've wondered if an effect like this would show up. Increasingly, U.S. corn production is being diverted into the production of ethanol. Corn prices have hit a 10 year high. Now Mexico is seeing the effect.

Mexico's President Felipe Calderon has pledged to intervene to tackle the soaring price of tortillas, the flat corn bread which is a local staple.

The price of tortillas, the main source of calories for many of Mexico's poor, rose by more than 10% last year.

They had been relying on the U.S. -

Under the 1994 North American Free Trade Agreement, Mexico used to get cheap corn imports from the US, but Mexico's Economy Minister Eduardo Sojo said that with more US corn being diverted into ethanol production, supply was dwindling.

I'm wondering if we are going to be seeing even more of this soon. What happens when corn and soybeans surpluses are diverted to biodiesel production? Will this effect U.S. food prices? I take it as a given that the cheap exports to third world countries will end.

It also seems to me that the 'green pioneer' biodiesel makers are going to be up the creek shortly. You know, those garage tinkerers who are turning used french fry oil into fuel? Because if NYC is going to ban the use of trans fats, followed by others, where will the garage-gurus get their free-for-the-taking oil.

I'm guessing that some people will find this change good. Our farmers certainly wouldn't mind collecting record high corn and soybean prices. Which allows us to lower trade barriers to imports from small, poor farmers around the world. And then, ummm, they send their grain to us to turn into automobile fuel rather than selling it cheaply to other poor people in their home country cities. Leading to even more hunger.

Is this what happens when Dr. Malthus meets Murphy? Apparently, some others think so as well.