The story of food prices

In first year of graduate studies at Iowa State I was research assistant to a professor who worked on ehtanol. It turned out the research we were doing was to be used to support a law that changed the corn production forever. The law made it mandatory that each type of gasoline would have to be mixed with 2% ethanol (which is produced from corn).  It started in Iowa and then throughout US increasing demand for corn for ethanol production. As more corn was used for ethanol and less left for food industry the price of food increased. At that time I did not see this weird effect on food prices. All I was worried about was the damaging effect ethanol had on car engines as it did burn faster than gasoline. How wrong I was in my interpretations.

The story of food prices in the picture below.



The Factors Driving Food Prices (CME Open Markets)






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