Steve Verdon on the "Food Rationing"

It is not nearly as bad as it was reported, according to Steve Verdon. One reason, the mandated switch to bio-fuels:

Still, there is a problem with food prices right now. They are going up, and going up quite a bit. One reason for this is the switch to biofuels due to government mandates. The subsidies for using corn for ethanol production has helped drive up the price of corn. This in turn causes people to substitute away from corn to various substitutes which are also going up in price.

These factors combined are why we are seeing riots in various places around the world and also why there are signs of problems here in the U.S. Green fuel initiatives that have pushed biofuels are a big mistake.

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And yet, biofuels were supposed to be good for the environment and break the grip of the OPEC oil cartel and put a dent in the petro-dollars flowing to terrorists. Nevermind that oil is at its highest price in nominal and real terms. That biofuels would lead to these kinds of problems was obvious. If biofuels were indeed a cheaper alternative to oil, then economies would have switched. I don’t care what kind of lame-brained conspiracy theory you adhere to regarding ExxonMobil or other oil companies, the switch would have occured. What this means is that biofuels are more expensive that oil as an energy source, and that forcing a switch would mean we end up worse off.

Verdon makes some other good points.

But we are still left with a situation where food prices are going up. While there is no government rationing of any sort in America, there are food shortages elsewhere.

Are we on the verge of resource conflicts? Probably not, but anytime someone steps up with a solution, think about this: Bio Fuels were supposed to be a solution for the energy crisis, but oil based fuels continue to rise in price. Which if bio-fuels were supposed to work, the supply of oil would have increased and the price decreased.

Yeah, after paying $50 for a tank of gas (just under 13 gallons) this morning, it is hard for me to see how those bio-fuels are working in my favor, in either gas or food prices.

Follow Up on Food Rationing Story

The last post was about the possibility of food rationing in this country, a concept I thought rediculous given the fact that retailers, as opposed to the goverment, were limiting the number of items a person could purchase.

However, it does give a thought--could this be the path to curing the obesity problem in America?


Not that I condone any sort of governmental program that tells me what I can and cannot eat--absent a real food shortage.

However, don't be surprised if such an idea comes up on the campaign trail.

Food Rationing in America

That is the headline in the New York Sun Food Rationing Confronts Breadbasket of the World. Sounds omnious right? Well, take a look at the lead:

Many parts of America, long considered the breadbasket of the world, are now confronting a once unthinkable phenomenon: food rationing.

Major retailers in New York, in areas of New England, and on the West Coast are limiting purchases of flour, rice, and cooking oil as demand outstrips supply. There are also anecdotal reports that some consumers are hoarding grain stocks.

At a Costco Warehouse in Mountain View, Calif., yesterday, shoppers grew frustrated and occasionally uttered expletives as they searched in vain for the large sacks of rice they usually buy.

"Retailers are limiting purchases" is far different from rationing. Rationing is, by definition, a governmental limitation on the the amount of food that a person can have. We had gas rationing in the 1970's and rationing during World War II. The issue was not so much a matter of a dearth of supplies but that people would hoard things because they can buy something that is non-perishable, or relatively non-perishable at a lower price.

Retailers know that the price of these staples, like flour, rice, etc are going to go up, either in response to demand or more likley because wholesale costs are going up as a result of increased energy, fuel and other fixed costs that underlie the price of such goods.

Retailers often limit the amount a person can buy on certain items. For instance, when there is a sale on say Coca-Cola 2-liter bottles for $.99 a bottle, there is often a limit of five or ten. A retailer imposed limit on a product is not rationing.

However, are we looking at food shortages or price spikes or a combination of both.