Minnesota Farmer

So have food prices gone down?

Back in 2011 corn prices started a dramatic rise in response to demand and drought.  By the time 2012 was  over corn prices had climbed to over $7 and at times touched $8 per bushel.  Oil companies and grocery chains blamed the rise in prices in the grocery stores to the use of ethanol in gasoline.  They were talking food versus fuel.  Because ethanol was using so much corn for fuel, they claimed that the rise in prices at the grocery store had to be ethanol’s fault.  Now dent corn prices are below $4.50 a bushel and are headed lower, so let me ask you, Are grocery store prices going down?images

Those of us on the farm were not seeing the connection.  We understood that a large part of the corn seed was left over after ethanol production and that high protein feed source, DDG’s (Distillers Dried Grains with Solids), was actually lowering the price of feed ingredients for livestock producers.  We also knew that corn had been in oversupply until quite recently, and that is why when a new buyer for corn was found in ethanol production we were thankful.

The dollars just were not adding up the way they were supposed to if food prices were increasing.  If the price of corn had such a huge impact on grocery prices, then the prices at the store should have been cut almost in half this last year.Screen_Shot_20130110_at_11_39E2AB983A137

There is only a small percentage of the corn raised in the U.S. that is used for human consumption.  When you add the 38% that is used for feeding livestock to the 11% that are the DDG’s left from ethanol production, 49% of our corn production goes straight to livestock production.  Corn that goes directly to food for people is only a part of the 11% other uses and 12% for exports.

So who is to blame for rising food prices?  The World Bank has found that most of the increase in world food prices can be laid at the door of oil companies.  The cost of food in the world more accurately follows the increase in oil prices.  Since transportation of food and the use of oil based packaging have become such a large part of the cost of our food, it only make sense.  So there you have it, Big Oil, in an effort to deflect the anger at rising food prices from themselves, found a scape goat in a smaller competitor.

And who can you thank for helping hold down the cost of food by reducing the price of oil products?  Those corn farmers and their ethanol companies who have been holding down the price of transportation fuels by producing a cleaner, cheaper gasoline alternative.


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