Wednesday, October 24, 2007

Canadian Bank Blames Ethanol for Food Price Increases

From the Canadian Press:

The cost of everything from tortillas to cereals and corn starch will rise in Canada because America's policy of subsidizing ethanol to cut dependence on foreign oil has led to rising demand for corn, says a report released Monday.

Corn-based staples like tortillas have become more costly, along with other grains, fruits and vegetables that are pushed aside as farmers cash in on corn, said CIBC World Markets' chief economist Jeff Rubin.

"When you add it all up it's fairly significant because food inflation is already well over four per cent and we would expect it to move higher as more and more corn production is diverted to ethanol as is required under President Bush's plan," Rubin added.

"When you overlay that with the inflationary hit from oil itself, they're going to produce the hottest inflation numbers that we've seen yet this cycle."

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