Food prices are set for a period of “significant and long-lasting” inflation, in part because of demand from biofuels, according to the head of global food giant Nestlé.
Peter Brabeck, The Nestlé chairman cited population growth, rising demand from “the phenomena of India and China” and the use of food products by biofuel producers as causes of pressure in international food markets.
Corn prices have risen about 60 per cent and wheat about 50 per cent over the last 12 months.
Meanwhile a report by 11 civil society groups argues that the rush for ‘biofuels’ is already causing serious damage.
The report finds that biofuels from agriculture –called agrofuels – threaten to greatly accelerate climate change through the destruction of ecosystems and carbon sinks on which we depend for a stable climate. The rush to agrofuels encourages intensive, industrial agriculture at the expense of sustainable food production.
“Monoculture plantations have been doing serious damage around the world for decades, but agrofuels represent a further intensification of the process, endangering what remains of global forest cover and climate. They also threaten the food sovereignty, cultural, human and land rights of indigenous peoples and local communities”, says Helena Paul of Econexus, one of the authors.
Of course, Nestle, as with most giant food industry processors and retailers, will be against ethanol and biofuels. Why? Because they have always made much of their profits on the backs of the producer farmers, who, according to the USDA, receive only about 20 cents out of every dollar Americans spend on food/groceries. Those other 80 cents go to highly profitable companies like Nestle and also the grocery chains.
Corn and wheat prices going up 50 percent at the commodity price level? Big deal. Corn and wheat prices, before the current biofuel and ethanol push, did not increase at all for the past 25 years. Look, in the early 1980s, corn cost about $2.20 per bushel, it was roughly that same price in 2003-2004. Now, if one took the price of corn in 1980, applied the historical average inflation rate, corn should be expected to cost at least $8 plus per bushel today in 2007.
At the same time, now that corn has reached $3.75 to $4.00 per bushel, it means that there is no subsidy expense that has been paid by the federal government when corn prices were in the low $2 range.
While there are certainly legitimate concerns about using crops for ethanol, environmental and otherwise, the Nestle Chairman is the last person from whom you will get an honest statement about ethanol and biofuels. He, like the big agriculture/industrial giants, such as Tyson, IBP, Conagra, etc,, has his company’s own financial interest in mind.
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