Discovering Mechanics: Louis Renault e-book (RENAULT) | Page 198

Food price effects

First round impact approximated by (change in price of raw
ingredient) x (share of food item price represented by that
ingredient)
Example

Maize is 38% of cost of producing pigmeat, and pigmeat is 28%
of final retail price of pork
 Suppose ethanol demand increases maize price by 50%
 Price of pork would then increase by 5.3%
 Overall, doubling of feed grain and oilseed prices would
increase food prices by less than 4%