I claim no prior expertise in this matter. Indeed, I am confused; I had thought that natural gas prices, not oil prices, would drive costs of agricultural commodities. But the latest spike in petroleum has not been matched by natural gas.
- Direct forcing by oil prices
- Speculation yielding common pressures across commodities
- Increased middle classes in China bidding prices up for animal feed over human use
- Increased biofuel demand
- Crop damage due to widespread climate disruption
From here, a gallon of gasoline is 114 K Btu. Treating diesel and gasoline as roughly equivalent, we have 637 trillion/114 thousand = 5.6 billion gallons of liquid fuel. Even at $4 per gallon this amounts to only 1/6 the total price. So at first pass the food price is overreacting to the fuel price by a factor of about 4.
Possible confounds: meat double counting: a good fraction of agriculture is for animal feed rather than directly for humans. This will increase the fuel intensity dramatically for that sector. Non-food components, especially forestry, accounts for a significant fraction of GDP and is low energy use. Luxury foods, perhaps not counted in the FAO index, which will produce a high GDP per unit of energy because they are labor-intensive and/or high-profit.
So, we have a dollar’s worth of food containing at least 18 cents worth of liquid fuel at present prices, only 9 cents at 2005 prices, at the moment the farmer sells to the distributor. This does NOT count the energy input into the fertilizer or heavy equipment or other items purchased by the framer.
Update via Rust Never Sleeps in comments:
“The energy costs of common foodstuffs range widely, due to different modes of production (such as intensity of fertilization and pesticide applications, use of rain-fed or irrigated cropping, or manual or mechanized harvesting) and the intensities of subsequent processing. The typical costs of harvested staples are around 0.1toe/t* (*ton of oil equivalent per ton) for wheat, corn and temperate fruit, and at least 0.25 toe/t for rice. Produce grown in large greenhouses is most energy intensive: peppers and tomatoes costs as much as 1 toe/t. Modern fishing has a similarly high fuel cost per kilogram of catch. These rates can be translated into interesting output/input ratios: harvested wheat contains nearly four times as much energy as was used to produce it, but the energy consumed in growing greenhouse tomatoes can be up to fifty times higher than their energy content.
These ratios show the degree to which modern agriculture has become dependent on external energy subsidies: as Howard Odum put it in 1971, we now eat potatoes partly made of oil. But they cannot simplistically be interpreted as indicators of energy efficiency; we do not eat tomatoes just for their energy, but for their taste, and vitamin C and lycopene content, and we cannot (unlike some bacteria) eat diesel fuel. Moreover, in all affluent countries, food’s total energy cost is dominated by processing, packaging, long-distance transport (often with cooling or refrigeration), retail, shopping trips, refrigeration, cooking and washing of dishes – at least doubling, and in many cases tripling or quadrupling, the energy costs of agricultural production.”(Smil, Energy, 2006. pg. 152)
More in Smil 2008 Energy in Nature and Society: General Energetics of Complex Systems.
Very much the sort of thing I was looking for, thanks.
I still don’t understand why food prices should be as sensitive to gasoline prices as the last few years would seem to indicate. I presume the basket used by the FAO is not heavily processed, since we are mostly interested in what food for the poorest people costs. It seems everything besides mobile farm equipment and trucking can easily have substitute energy sources.
But if farmers and truckers have to compete with the whole market for tractor fuel, prices should indeed go up, if not quite as steeply as we see. Obviously, demand for grain is inelastic, and will perversely increase as the price goes up (and demand for meat goes down). Ultimately, food is what we need and everything else is what we want. That food should be cheap enough that we throw a good fraction away is bizarre…