In Bush’s case, it’s someone with his head buried in an Archer Daniels Midland corn crib.
On Friday, George Bush explained his view of why food prices are going up. During a visit to World Wide Technology, an IT company in Missouri, he laid the blame on increasing world-wide prosperity.
“…the more prosperous the world is, the more opportunity there is. It also, however, increases demand. So, for example, just as an interesting thought for you, there are 350 million people in India who are classified as middle class. That’s bigger than America. Their middle class is larger than our entire population. And when you start getting wealth, you start demanding better nutrition and better food. And so demand is high, and that causes the price to go up”, said Mr Bush.
He went on to defend ethanol, saying, “As you know, I’m a ethanol person. I believe, as I told you, the interim step to getting away from oil and gas is to go to ethanol and battery technologies for your automobiles. I think it makes sense for America to be growing energy. I’d much rather be paying our farmers when we go to the gas pump than paying some nation that may not like us.” (See the Economic Times for more details on the visit.)
In other words, the aspirations of the Indian middle class is the problem. A few readily available numbers show how silly this is. Fortunately the Earth Policy Institute has posted them (the numbers), along with an analysis that clearly explains how ethanol production is is clearly the culprit. See: Why Ethanol Production Will Drive World Food Prices Even Higher in 2008.
The silliness is not hard to debunk.
From 1990 to 2005, world-wide grain consumption grew by 21 million tons per year, driven by population increase and increased consumption of less efficient foods.
Then came Ethanol. Ethanol demand increased by 27 million tons from 2006 to 2007. Based on the projected number of new distilleries coming on line, it will increase by another 35 million tons in 2008. In other word, ethanol usage is tripling the normal yearly increase in demand. To suggest this is not having an effect is ludicrous, even by Bush standards.
And what about the Indian middle class? From 1980 until now, the world-wide consumption of grain has averaged about 300kg per person per year. That means they are consuming about 105 million tons/year. The 114 million tons of grain used to make ethanol in 2008 would easily provide them with “better nutrition and better food”, and since we’ve already counted them in our projections, we’d have a surplus which we could use to feed another few hundred million people.