Wednesday, July 25, 2007

TCS Daily - Children of the Corn

TCS Daily - Children of the Corn:
"The historical significance of corn in the Americas is comparable to that of rice in China or wheat in the Middle East. Corn is more than a staple, it is part of the region's DNA -- which explains the hysteria in many Latin American countries over rising prices.
In just four years, leaders and organizations that style themselves as progressive have gone from denouncing the precipitous fall in the price of corn to denouncing its sharp climb -- with many of the same arguments!

Hardly a week goes by in which Cuba's Fidel Castro or Venezuela's Hugo Chavez is not accusing rich imperialists of deliberately pumping up the price of corn in order to impoverish Latin Americans. But in 2003, when corn prices were dropping dramatically, Phil Twyford of Oxfam, a left-oriented humanitarian organization, pontificated, 'The Mexican corn crisis is another example of world trade rules that are rigged to help the rich and powerful, while destroying the livelihoods of millions of poor people.'

The rise in corn prices since 2006 has much to do with the synthetic fuel ethanol, which is made from a corn base or from sugar cane and is heavily subsidized by the U.S. and Europe. But there are other elements in play. Protectionism, such as Guatemala's 20 percent tariff on corn imports, is one other reason Latin Americans find it harder to buy tortillas. In Mexico, in
direct price controls have caused shortages of white corn."
This article by Alvaro Vargas Llosa gives a perspective on maize (as corn is properly designated) and its intersection with the world of hunger, justice, tariffs, subsidies, and politics. Nothings is quite as simple as people want to make it, and in this case, it probably isn't the subsidies that are to blame.

Note -- "corn" is a term that refers to a region's predominant food grain. In Great Britain it refers to wheat. In the US most people would associate corn with maize, but using the proper name eliminates ambiguity.

Vargas does an interesting comparison between Guatemala and Mexico in how they approach maize and how they react to alternative fuels that have been implicated in the higher prices for maize.

Interestingly enough, maize may not be the main crop that goes into ethanol production; sugar cane may be as important. In addition, it takes a fair amount of fossil fuel to get a crop in the ground, irrigated, harvested, and processed for ethanol production. It is not a completely "green" energy source, although it does tend to oxidize more completely than octane.

The world is not quite as simple as the sound bites would make it...


Michael Kruse said...

Thanks for highlighting this article. Complex indeed.

Denis Hancock said...

I was impressed with the author's analysis of the differences in perspective between Mexico and Guatemala.

It's odd, isn't it, that the two most outspoken countries when it comes to criticizing ethanol production are also the New World's largest oil producers?