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Spike in Food Prices Projected by 2013

The conversion of corn crops to ethanol and market speculation predicted to lead global food prices to reach record highs.
March 8, 2012

NEW YORK - Researchers are predicting that food prices will rise to record highs by next year, the New York Times reports.

The spike will lead to widespread hunger in "the most vulnerable populations �� with an enormous potential for loss of human life."

The research was generated by the New England Complex Systems Institute last September and has gained credibility by successfully predicting food prices over the past 10 months. The key factors leading to rising food prices are the conversion of corn crops to ethanol and speculation on the agricultural futures market.

"There are two policy decisions we��ve identified as key drivers," said Yaneer Bar-Yam, president of the Institute. "The first is the promotion of ethanol conversion, which provides the U.S. with less than one percent of its energy but has a much larger effect on global food availability." And the second is the deregulation of commodity markets.

The U.S. has taken steps to address both of those factors. Last October, the Commodity Futures Trading Commission agreed to limit the number of agriculture or energy commodity contracts that an investor could hold, and ethanol subsidies were eliminated in December.

However, Dr. Bar-Yam dismissed both of those measures as having little impact on preventing food prices from spiking. The federal government still guarantees demand for 37% of the nation��s corn crop, and before ethanol subsidies ended, roughly 40% of the corn crop was being converted to ethanol.

Additionally, there is strong opposition to the commodities commission��s regulation, with no guarantee that what takes effect at the end of the year will be effective.