Policy Changes Could Lessen Food Shortages and Price Spikes - Will Biden Embrace Them?

AP Photo/Patrick Semansky

(The opinions expressed in guest op-eds are those of the writer and do not necessarily represent the views of RedState.com.)

Wheat and corn prices shot up after Russia invaded Ukraine, sparking fears of looming shortages of these staple crops.

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Russia and Ukraine are responsible for almost 30 percent of global wheat exports and nearly 20 percent of global corn supplies.

Despite the fact that America does not rely on wheat or corn from Russia or Ukraine, because staple crops are traded globally on commodity markets, wheat futures reached record highs in early March shortly after Putin launched his war in Ukraine. In fact, wheat traded 41 percent higher on the Chicago exchange in the first week of March compared to the previous week. That price jump was the sharpest rise in more than 60 years.

Because Ukraine accounts for 13 percent of the corn traded on global markets, corn prices also rose dramatically after the Russian invasion as well. Since the invasion, corn prices have risen more than 21 percent.

Even before the war, however, corn, wheat, and other food prices had been on a steep upward trajectory, and supermarket and grocery store shelves told a tale of shortages of many commodities.

Corn prices alone increased more than 20 percent in 2021.

What’s true of crops is true of dairy and meat prices as well. As a result, in early February, the Bureau of Labor Statistics Consumer Price Index (CPI) showed that compared with February 2021, food prices in general increased by a whopping 7.9 percent year over year, a price increase higher than any in the past 40 years.  Note that was before Russia invaded Ukraine. Indeed, as detailed by the Heritage Foundation, “[o]ver the past six months, every month’s price increase has been above 4 percent and each successive month has been higher than the previous month (starting at 4.6 percent in September through 7.9 percent in February).”

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Of course, the CPI confirmed what grocery shoppers already knew, food prices have been getting worse every month.

No set of Biden administration policies has had a greater impact on food prices than its energy policies. Oil and gas are critical to food production. The tractors, harvesters, loaders, trucks, trains, and irrigation systems on farms don’t run on unicorn farts or green energy fantasies, they run on diesel, gasoline, and natural gas. And the fertilizers and pesticides that make U.S. crop production and yields the envy of the world are made out of and using oil and gas as well.

As detailed in a recent report from The Heartland Institute, the most important factor driving higher oil and gas prices has been the series of anti-fossil-fuel measures implemented by the Biden administration. Oil prices rose 60 percent, natural gas prices surged by 61 percent, and the price of gasoline rose 98 cents per gallon, about 42 percent. Indeed, agriculture is a very energy-intensive industry.

Not only has the cost of fuel used to plant, harvest, and ship crops increased, so has the cost of fertilizer. Oil and natural gas, a component of fertilizers, have multiple uses. Also, there is limited refining and chemical capacity. Moreover, oil and gas used and refined for transportation fuels, for instance, can’t be turned into fertilizer. During times of abundant and growing supply, that is not a problem, but, of course, that’s not the situation we confront now. As a result, fertilizer prices have risen even faster than oil and gas prices in general, being as much as 98 percent higher in January 2022 than they were in January 2021.

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The Biden administration’s successful efforts to stop oil and gas pipelines from being built, its new regulations on oil and gas operations, its moratorium on new oil and gas leases, and its slow-walking of drilling permits, have caused higher oil and gas prices, and, as a result, higher food prices as well.

Biden and his team either can’t understand the connection or get it, but don’t care. Remember before Thanksgiving, when White House Press Secretary Jen Psaki downplayed the rising costs of turkeys. Or in early February 2021, when Energy Secretary Jennifer Granholm laughed when asked about the impact of rising gas prices on American households, and whether the Biden administration would reverse its energy policies.

Absent Biden reversing his anti-fossil fuel policies, is there a policy that could help alleviate current and pending food shortages and price hikes?

Yes. Currently, the federal government pays farmers to not farm on 2.4 million acres of valuable cropland under the federal Conservation Reserve Program (CRP). What’s more, 1.275 million of arable land lies fallow under the Wetland Reserve Program (WRP).

One can debate whether it’s wise federal policy to pay farmers not to farm under normal circumstances when crops are plentiful, but that’s not the case now. With pending food shortfalls and drastically higher prices, some peoples’ lives are literally at risk, and the poor, especially, might face choosing between buying food or other essentials.

Accordingly, the Department of Agriculture should issue an emergency waiver allowing farmers, without penalty, to put acreage enrolled in the CRP and WRP into production. This waiver should continue for as long as the crisis does. This could bring millions of acreage into production, alleviating at least some of the price hike and pending shortfall.

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Going forward, if the CRP and WRP continue, such an emergency waiver should be built into all contracts, allowing the Agriculture Secretary to declare a crisis that would automatically result in a waiver being issued allowing food production on lands fallowed under the programs.

Opening up more acreage to production would likely have bipartisan support, and it could have a positive effect this growing season, helping alleviate domestic and global food shortfalls.

H. Sterling Burnett, Ph.D. ([email protected]) is the director of the Arthur B. Robinson Center on Climate and Environmental Policy at The Heartland Institute, a nonpartisan, nonprofit research center headquartered in Arlington Heights, Illinois.

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