Energy or Food: Choose One

by Azreel | March 25th, 2008

And So it Begins: Riots in Egypt over Bread Shortage. Worldwide stockpiles of wheat have been dwindling over the past couple of years. Rising natural gas prices have increased the cost of fertilizer. Increased subsidized corn production to support ethanol has further reduced wheat production and increased prices. Finally, increased oil prices have made it more expensive to transport. The net result? A huge run up in wheat prices.

The 17-year-old, wearing a ragged T-shirt as he stood in a long line, said he and co-workers can’t afford unsubsidized bread, “or any food to eat with it.”

Any Egyptian can get subsidized bread under a decades-old system that also provides subsidies for public transportation and gasoline for all. The system also provides subsidies for some other food staples specifically for the poor.

Demand for the subsidized bread has grown steadily in recent months as rising commodity prices — especially for flour — have made unsubsidized bread less affordable.

So, with less poor able to afford food, the government of Egypt is attempting to keep up with the demand for the affordable subsidized bread. With predictable results.

Edit: In other news, Seed company Monsanto announces higher than expected profits this quarter. Monsanto is a (genetically modified) seed and herbicide company. Profits are up primarily due to brand share growth and increased volume in the soybean business. Meanwhile, Monsanto said its Roundup and other herbicides have performed well in the second quarter, with demand exceeding supply.

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