Food coloring or dye is really simple to make.
This Makes a Beautiful Red Color
Put your fresh beets in a glass or enamel pan with just enough water to fully cover them. Bring to a boil and turn the heat down a bit to simmer for 30 minutes. Make sure the water doesn't boil out. Take them off when the beets are not quite done - When a knife goes into them but they're not as soft as you'd like for eating. Remove them from heat.
Strain the beets, reserving the beet juice. Peel, slice and chop up your beets. Return them to the beet juice. Soak for four hours.
Strain the liquid out and take out 3/4 cup. Add your 2 teaspoons vinegar to this. This is your red dye.
Use canned beets and you can skip half of the work. Drain the can reserving 3/4 cup liquid. Add 2 teaspoon of vinegar to this and you're done. You can still eat the beets, too. The fresh ones aren't terribly appealing after this.
Use this dye to color Easter eggs or to color homemade modeling clay. You can use this on anything you want but remember that the color will fade over time since it is a natural substance. It isn't the best to use on fabrics but it's great for coloring school projects such as papier mache items which don't have to last forever.
For many projects, you'll want several colors. Check out the rest of the articles on all natural dyes here on eHow.