CORN ISN'T CULPRIT IN HIGHER FOOD PRICES
WASHINGTON, D.C. -- The price of food is going up -- not by much, but enough to get noticed. Food prices are up about 4 percent over a year ago, higher than the overall inflation rate.
Americans are used to affordable food, so a price increase of only a few cents brings questions about who is to blame. It didn't take long for the news media to start running stories about how ethanol production is driving up the cost of corn and, by extension, everything from milk and meat to colas and corn flakes.
"Not so fast," say Farm Bureau and the National Corn Growers Association. The price of corn may be going up because of ethanol, but food prices are not going up because of corn.
We all know that energy costs have skyrocketed. The National Corn Growers Association says that has a much greater impact on food costs, because it takes energy to produce, process, package and ship nearly everything we eat. Corn, however, is only one segment of the food market.
Farm Bureau also says rising energy prices are more to blame, along with weather disasters that have ruined crops, last year's low milk prices that have caused producers to cut production and low world supplies of wheat.
"Ethanol is getting a bad rap, because people aren't looking at all the other factors that are involved in food prices," says Farm Bureau economist Terry Francl. He says there is little evidence that any food category has been affected significantly by higher corn prices.
Agriculture advocates used to paste on a box of corn flakes the price of the corn it contained, to show how small the farmer's share was. Things haven't changed -- the value of corn in a 12-ounce box was around 2.2 cents when corn was less than $2 a bushel. Today it's still less than a nickel. That's not what you would call a big impact on the price of a major brand of corn flakes, which sells at $3.50 for a 12-ounce box.
Of course, nobody outside of agriculture complained when corn farmers were getting by on less than $2 per bushel. Now that they can get about twice that, thanks to ethanol, they are practically being blamed for taking milk from babies. That's unfair, especially since no one has been able to show a specific connection between ethanol demand and food prices.
The negative attention this "food versus fuel" debate brings to ethanol is unfortunate, since the growing use of ethanol is a good thing for our country. It reduces our dependence on foreign oil and it's better for our environment. And rising crop prices are good for rural America.
Farmers have a can-do attitude about meeting the demand for corn. And with a bumper crop expected this year, chances are there will be plenty of corn to go around. As one corn grower said, "There is no conflict between food and fuel -- we can produce both."
So much for the "food versus fuel" conflict. Rather, it's a conflict between perception and reality.
Lynne Finnerty is the editor of FBNews, a publication of the American Farm Bureau Federation.