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July 30, 2008

World Bank: Blame ethanol policy for expensive food

Who you gonna believe? The Renewable Fuels Association, which is bought and paid for by the ethanol industry?

Numerous statistical analyses have demonstrated that the price of oil - not corn prices or ethanol production - has the greatest impact on consumer food prices because is integral to virtually every phase of food production, from processing to packaging to transportation.

Or the independent economists at the World Bank?

The combination of higher energy prices and related increases in fertilizer prices and transport costs, and dollar weakness caused food prices to rise by about 35-40 percentage points from January 2002 until June 2008. These factors explain 25-30 percent of the total price increase, and most of the remaining 70-75 percent increase in food commodities prices was due to biofuels and the related consequences of low grain stocks, large land use shifts, speculative activity and export bans.

Posted by Jay Hancock at 11:35 AM | | Comments (0)

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.

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