I posted this awhile back in the money and finance section. Explains why food prices have good up so much recently.
http://forum.purseblog.com/money-talks/cost-food-go-up-next-year-heres-why-273873.html
Also, for those living in Asia, start watching your rice prices go thru the roof. Japan is also joining the insanity and plans on turning their rice (food) into fuel.
Here's the article from today's WSJ:
Oil-Dependent Japan Tries Turning Rice Into Fuel
By YUKA HAYASHI
June 25, 2008; Page A10
NIIGATA, Japan -- For decades, Yasuji Tsukada has meticulously tended his terraced rice paddies to grow top-quality rice for Japan's demanding consumers.
Now the 60-year-old farmer faces a new challenge: Grow a new type of rice but spend as little money and labor as possible and ignore its taste and appearance.
Mr. Tsukada is among the 360 farmers in this renowned rice-growing region in central Japan who are on the forefront of an effort to develop a new type of biofuel. A group of Japanese farmer cooperatives, with some government funding, started a project last year to turn rice into ethanol, a fuel that can be mixed with gasoline to power automobiles. The cooperatives have asked farmers such as Mr. Tsukada to start growing cheap, high-yielding rice to be processed at what could be the world's first rice-ethanol plant, to open early next year. The group hopes the experimental factory -- half of whose cost is to be paid for by the government -- will help it determine if rice ethanol is technically and financially feasible.
On the northern island of Hokkaido, Oenon Holdings Inc., an alcoholic-beverage maker that started out as a sake brewery, is building another rice-ethanol plant, also with government assistance. The technology needed to turn rice into ethanol -- also know as grain alcohol -- is very similar to that used to make sake. An Oenon spokesman said the company wants to see over the next five years whether the project will be profitable.
For now, the cost of growing rice is too high to make rice ethanol commercially profitable for farmers, unless the government increases subsidies.
Oil accounts for 44% of Japan's total energy needs, and nearly all of its oil is imported. With oil prices rising, the country is eager to diversify its sources of energy.
While the country imports most of its raw materials and food, it is self-sufficient in rice production, and even has a surplus. A change in the Japanese diet has significantly reduced rice consumption over the past decades, but government subsidies and farmers' persistence have kept rice farming popular. Warehouses are brimming with rice and the countryside is dotted with rice paddies left fallow or converted temporarily to other crops to prevent overproduction.
"We have the land, people and technology to make this happen in Japan," says Shigenori Morita, a professor of agriculture at the University of Tokyo. He estimates Japan could make up to one million kiloliters (264 million gallons) of rice-based ethanol annually -- the equivalent of 1.7% of its gasoline consumption -- by planting crops in idled rice fields. The initial production will be tiny; the new ethanol plant in Niigata will make just 1,000 kiloliters of ethanol a year. The output will be mixed with gasoline and sold at local farmer cooperatives' pumps.
Backers of the experiment say large-scale Japanese rice-for-fuel production won't push up prices, as has been seen elsewhere in the diversion of corn and sugarcane for ethanol production.
As global biofuel output increases -- rising annually by the equivalent of roughly 300,000 barrels per day of oil -- researchers are looking to develop biofuels that use nonfood crops, such as switchgrass and jatropha, to avoid further driving up food prices. But because Japanese rice is expensive -- a result of high production costs and government price controls -- little is exported, and the market is largely self-contained.
Prof. Morita says biofuel rice would contribute to the environment and food safety in Japan by adding greenery to the rural landscape and helping keep paddies in good condition for possible future reconversion to food-rice growth.
But the same things that shape the Japanese rice market -- notably high costs and inefficiencies -- could pose problems for large-scale rice-ethanol production. Most farms are small, family-run operations with just a few hectares of land. (A hectare is 2.47 acres.) And many rice paddies are divided into small lots or laid out in terraces on the sides of mountains, making automation difficult.
Mr. Tsukada had already stopped growing rice for consumption on about three hectares of his 30-hectare farm to qualify for government subsidies. He tried to grow soybeans but the land is too wet and the quality and size of the crops have been less than satisfactory. So when the local farmers cooperative suggested planting rice for ethanol last year, Mr. Tsukada, who works his land with his wife and son, was happy to give it a try.
After a fairly successful fall harvest, Mr. Tsukada has allocated more land to the special rice. He planted the seedlings last month. "They've told us over and over again to switch to soybeans and start growing vegetables," says Mr. Tsukada. "But I'm a rice farmer and I'd rather stick with rice if I can."
Mr. Tsukada has started growing Hokuriku 193 rice, a high-yielding breed that was developed as animal feed. Its stalks grow tall and thick and its output could be as much as 70% higher than the average Japanese rice plant. The biofuel factory in Niigata will use the rice grains to produce alcohol and will power its production machinery using rice husks.
Mr. Tsukada sold his fuel crop at 20 yen per kilogram last year, compared with 230 yen for high-grade food rice. This pays just a small portion of his production cost. For now, temporary incentives and subsidies cover some of the balance, but he thinks he will still come out behind.
"I'd be happy to keep growing biofuel rice," says Mr. Tsukada. "I only wish they will give us a better price."
On the other hand, my plum trees look like they are going to produce bushels and bushels this year.
, but I liked the ability to run to the grocery in the middle of the night if you needed to. 