In Mexico tortilla prices have risen as much as 400% since November causing President Felipe Calderon to promise publicily that he will look into the matter.

The cause of this price surge? Ethanol, or more accurately speculation about the large scale deployment of Ethanol vehicles:

Mexico now imports much of its corn from the United States, where prices have rocketed 80 per cent to their highest levels in a decade last year due to demand for corn-based ethanol fuel. Government officials say, however, that the leap in tortilla prices has as much to do with speculation and hoarding by traders as it does with the high US prices.

Now I’m sure that in their quest for cleaner air, a reduced reliance on fossil fuels, a desire to punish big oil, and a reduction in greenhouse gases, ethanol advocates just didn’t think about how the increased demand for corn would affect prices. Although if they read Consumer Reports they might have. In the Septemper 2006 issue they examined the fuel efficiency, emissions, and environmental impact of corn cased ethanol production and found that the majority of the corn produced in the US would have to be diverted to ethanol production to be a feasible fuel source. Of course that means there is less available for use as food. This means a rise in food prices.

Of course I could be wrong. One of the most damaging of the greenhouse gases is Methane and tacos do contain methane gas producing beans.

Other:

The power of Big Corn - Boston Globe

THE NATION’S growing appetite for ethanol as an alternative motor fuel is so great that one environmental group warns of a corn shortage, which could raise prices for the many corn-based food and drink products the nation consumes. This competition for corn, though, could be easily avoided if Congress would do away with the tariffs and import restrictions that keep the United States from making greater use of sugar-based ethanol, which requires much less energy than the corn-based version.

Crop report: Corn supplies dwindle, prices rise in United States - Canada.com

WASHINGTON (AP) - Ethanol plants and foreign buyers are gobbling America’s corn supplies, pushing prices as high as US$3.40 a bushel, the U.S. Agriculture Department said Friday.

Farmers haven’t seen prices this high for more than a decade - a range of $3 to $3.40 a bushel, according to the new crop forecast. That’s up 10 cents from December.

Robust prices have made corn more expensive to feed livestock.

…

Eventually, sustained high corn prices would probably lead to higher grocery bills, but so far there has been no boost in what consumers pay for beef or pork.

Growing hope in fields of corn - LA Times

SAN SALVADOR EL SECO, MEXICO — High corn prices are wreaking havoc on Mexico’s inflation rate and forcing shoppers to pay more for eggs, milk and tortillas. But they’re a godsend to farmers such as Victor Manuel Amador Luna.

With world corn prices riding high on strong demand from U.S. ethanol producers, Amador is looking to expand production on his farm about 125 miles east of Mexico City in the state of Puebla. He planted most of his 222 acres with corn this year and would like to buy more land.

…

How long the bonanza will last is anyone’s guess. What’s clear is that America’s thirst for ethanol is being felt around the globe, delivering fatter profits for grain farmers but higher costs for livestock producers, food processors and consumers.

The United States is the world’s No. 1 corn producer and exporter, shipping an estimated 2.2 billion bushels to international buyers last year. Most nations can’t compete with government-subsidized U.S. corn, which countries such as Mexico have come to rely on to fatten their hogs, chickens and cattle.

But with 110 ethanol plants in the U.S. snapping up hundreds of millions of bushels and 63 more refineries slated to come on line in the next 18 months, some foreign farmers are betting that America will soon have less of the grain available to export.

h/t Mr. Minority

This entry was posted on Monday, January 15th, 2007 at 11:05 am by Chad and is filed under Brilliant, but uncategorizable. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.