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How rising food prices are impacting the world

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And Guatemala and many of its neighbors in Central and South America are linked to US agricultural production and policy more tightly than ever. "These are countries that are net food importers and overwhelmingly dependent on products coming from the United States," says Fernando Soto Baquero, the senior policy officer for the UN Food and Agriculture Organization's Latin America office.

Between 90 and 99 percent of Central American corn imports come from the US. That dependency was cemented by a US-Central America free-trade agreement, commonly known as CAFTA–DR, which the US Congress narrowly passed in 2005. Since then, the value of annual corn exports to the region has doubled, to about $1 billion.

If the drought were the only factor driving prices, Guatemala and similar governments might have been able to blunt the effects. In theory, they could have bought corn to stockpile when supplies were abundant and prices were cheap, and then released some of the reserves this year, in a time of need.

But they haven't been able to do that because prices were inflated even before the drought struck. That's in part because of something else that happened in 2005: the passage of a law requiring ethanol, made from corn and other grains, to be added in ever increasing amounts to commercial gasoline. Under current law, the US wants to inject 36 billion gallons of ethanol into the fuel supply by 2022.

This year, roughly 40 percent of the US corn crop will go toward the production of ethanol, about 15 percent of the global corn supply. A recent study by researchers at Iowa State University found that the expansion of ethanol production accounted for 36 percent of the increase in the price of corn from 2006 to 2009.

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