Milk Cost Up 21% -- Ethanol Subsidies And China Behind It

Want to teach your kids, or yourself, about the global nature of energy and some startling 21st century realties? Go to the grocery store and pick up a carton of milk. Milk costs 21% more than it did a year ago, according to a story in today's USA Today. Milk costs more because corn costs more.

Corn costs more because the supply of feed corn is tight. The supply of feed corn is tight because more corn is being grown for fuel production than for food and feed, despite a near-record acreage being planted with corn this year. Farmers planted so much corn because the price is high, and the price is high because the United States is subsidizing the production of corn ethanol as an alternative fuel to gasoline.

The government is subsidizing ethanol because climate change fueled by burning fossil fuels is a growing concern, because imported foreign oil has helped inspire violent conflicts we'd rather avoid and because the world supply of oil is tight (not to mention the U.S. farm lobby is a powerful political force). The world supply of oil is tight for a variety of reasons, including that China is siphoning off an ever increasing amount for its rapid industrialization.

China is also siphoning off a growing amount of food and feed corn from the U.S. and elsewhere, because its growing middle class demands a higher standard of eating. This isn't meant to describe cause-and-effect logic. It is meant to show the global nature of something as simple as a gallon of milk, and the George Washington in your wallet. The interconnected forces of the global economy, global climate change, global terrorism and global energy supply are on display, every day, in every grocery store across America. You just have to look for them.

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