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COULD YOU expand on the relationship between the rising price of oil and the rising price of food? THE PRICE of food and the price of oil are closely related. This is so because modern mechanized agriculture is heavily reliant on petroleum and petroleum-based products to generate the increased yields necessary to feed growing world populations and sustain the profits of giant agribusiness firms. Every piece of farm machinery is powered by gasoline or diesel, and most food crops are delivered many miles to market by oil-powered trucks, trains, planes or boats. Hence, when the price of oil rises, the cost of all these other activities rises as well. In addition, petroleum is the feedstock for many of the pesticides and herbicides and other products that are needed to produce modern "miracle" crops that possess little resistance to disease. These, too, have risen in price. On top of all this, croplands around the world have been turned over to production for ethanol for road transportation, reducing the crops grown for food and adding additional upward pressure on global food prices.

HISTORICALLY, FUTURES contracts were traded primarily between producers of commodities and consumers of commodities at large, regulated commodities exchanges. Most futures contracts eventually resulted in the actual delivery of a commodity on a set date. That's all changed in recent years. Now, the bulk of firms trading on futures exchanges are speculators with no intention of ever receiving delivery of the commodities they are trading.

All other things being equal, the prices of expiring futures contracts should converge with the pricing on spot markets on the date of expiration--that is, the price of oil in June should be pretty close to the price of oil futures contracts trading today that expire in June. But there are huge divergences developing. Why? Because there are too many investors chasing too few futures contracts, and this is creating demand for the underlying commodity that drives up the price of the commodity to be delivered in the future.

World Bank economist Don Mitchell concluded that biofuels and related low grain inventories, speculative activity, and food export bans pushed prices up by 70 percent to 75 percent.

"The large increases in biofuels production in the U.S. and EU were supported by subsidies, mandates and tariffs on imports," Mitchell said in the research, which looks at rapid rises in food prices since 2002. "Without these policies, biofuels production would have been lower and food commodity price increases would have been smaller."

Bob Dineen, president of the Renewable Fuels Association, said the report showed a bias by the author against biofuels and underestimates the impact of higher energy prices and a weak dollar on higher food costs. "Such a simplistic approach fails to accurately and honestly account for the myriad of factors driving food costs higher," Dineen said. "I encourage the author and the World Bank to revisit the issue without bias, taking into account the increasingly significant role biofuels are playing in reducing global oil demand."

there are five basic guidelines, or principles, that must form the basis of any food policy.

The Principle of food sovereignty.

The Principle of priority of food over export crops produced by small farms sustained by state provision of the necessary infrastructure of financial credit, water, energy, extension service, transport, storage, marketing, and insurance against crop failures due to climate changes or other unforeseen circumstances.

The global food crisis is a monetary phenomenon, an unintended consequence of America's attempt to inflate its way out of a market failure. There are long-term reasons for food prices to rise, but the unprecedented spike in grain prices during the past year stems from the weakness of the American dollar. Washington's economic misery now threatens to become a geopolitical catastrophe.

“In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity without positive detriment to our national security. To do so, we will have to dispense with all sentimentality and day-dreaming; and our attention will have to be concentrated everywhere on our immediate national objectives. We need not deceive ourselves that we can afford today the luxury of altruism and world-benefaction.”“The day is not far off,” Kennan concluded, “when we are going to have to deal in straight power concepts.”

As Kennan recognized, however, the maintenance of such a concentration of wealth often requires violent action. Agriculture is a recent human experiment. For most of human history, we lived by gathering or killing a broad variety of nature's offerings. Why humans might have traded this approach for the complexities of agriculture is an interesting and long-debated question, especially because the skeletal evidence clearly indicates that early farmers were more poorly nourished, more disease-ridden and deformed, than their hunter-gatherer contemporaries. Farming did not improve most lives. The evidence that best points to the answer, I think, lies in the difference between early agricultural villages and their pre-agricultural counterparts—the presence not just of grain but of granaries and, more tellingly, of just a few houses significantly larger and more ornate than all the others attached to those granaries. Agriculture was not so much about food as it was about the accumulation of wealth. It benefited some humans, and those people have been in charge ever since.