Developing nations are also demanding more and better foods, especially meats, and they are often feeding their livestock with American grain.
Additionally, some nations with food shortages are shutting down food exports altogether. Fourteen countries have limited or banned the exportation of rice; 15 have done the same for wheat; and more than a dozen have cut down on corn exports.
The G8 " a group of eight industrialized nations " has called for an end or decrease of such restrictions, saying more open trade would lower food prices worldwide.
The golden grain
Corn in particular is a hot commodity now that ethanol has become a big factor in battling high gas prices. Corn is used to make ethanol in the United States, and there has been a massive push to get more of that alternative fuel to the market. Some would say the increased demand for ethanol has lead to a backlash, creating high corn prices that cause a ripple effect into other markets.
"Essentially, the mechanism is higher crude leads to higher gasoline, which leads to higher ethanol, which leads to more ethanol production, which increases corn demand, which increases corn price," states the Purdue report.
But a change in the price of a bushel of corn does not change the value of a box of cereal. According to the Economic Research Service, an arm of the USDA, an 18-ounce box of Corn Flakes contains about 12.9 ounces of milled field corn. Even $7 per bushel corn would mean only 10 cents of corn is in a box of Corn Flakes. The rest of the cost is composed of things like packaging, processing and transportation.
Corn is a big component of other things, though. One of those things is animal feed. Texas recently requested a lower requirement for ethanol in gasoline lately from the Environmental Protection Agency, citing, among other things, the high price of animal feed's effect on cattle farmers. The EPA is considering the waiver.