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2 Why does corn cost so much ?
Is it true that the price of corn in USA has tripled in the past 3 years ?It has been suggested that using corn for fuel instead of food is the cause.
Is there evidence to support this ?
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Along with other commodities, corn spiked up in price in early 2008 to record prices, but they are down to half that level now (though still more than what they were at the turn of the millennium).
In terms of fuel, Business Week in 2007 reported that,
"The roughly 5 billion gallons of ethanol made in 2006 by 112 U.S. plants consumed nearly one-fifth of the corn crop. If all the scores of factories under construction or planned go into operation, fuel will gobble up no less than half of the entire corn harvest by 2008."
http://www.businessweek.com/magazine/content/07_06/b4020093.htm
So yes, ethanol fuel is likely contributing to higher corn prices.
In terms of fuel, Business Week in 2007 reported that,
"The roughly 5 billion gallons of ethanol made in 2006 by 112 U.S. plants consumed nearly one-fifth of the corn crop. If all the scores of factories under construction or planned go into operation, fuel will gobble up no less than half of the entire corn harvest by 2008."
http://www.businessweek.com/magazine/content/07_06/b4020093.htm
So yes, ethanol fuel is likely contributing to higher corn prices.
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