Food companies and food organizations continue to push a campaign aimed at removing one of the most important tools our country has to fight against rising gas prices – ethanol. Food companies and their lobby group, the Grocery Manufacturers Association (GMA), continue to suggest ethanol production is the key driver of the rising price of food.
“There are many different factors that play into the increase in food prices,” said Scott Averhoff, chairman of Texas Corn Producers Board and corn producer in Waxahachie. “Numerous studies, including research from the U.S. Department of Agriculture and the President’s Council of Economic Advisors, have shown ethanol is not the key driver in increasing food prices. Demand for corn used for ethanol only represents about 3 percent of the 43 percent increase in global food prices since 2007.”
GMA has hired Glover Park Group, a Washington public relations firm, to launch an anti-ethanol campaign against the interests of the American farmer. GMA is trying to mislead consumers into believing, “support for corn-based ethanol is driving up food prices and creating a crisis that threatens the kitchen tables and pocketbooks of millions of Americans and the welfare of vulnerable populations worldwide.”
One food industry representative tried to explain Thursday that grocery prices for a package of turkey breasts have increased $1.50 in the past year. According to production statistics, the cost of corn needed to create a pound of turkey has increased by about 20 cents with the rise in corn prices from $2 to $6 per bushel (from 3.5 cents a pound to about 11 cents a pound). That means other factors, such as marketing and transportation, are responsible for the additional $1.31 increase.
While food companies are pushing the blame for increased food prices over the last year on ethanol, companies like General Mills Inc., are seeing cushy profits. Earlier this week, General Mills, the country’s second-largest cereal maker, reported a 61 percent increase in profit during the last quarter, an earnings total of $430.1 million for the period. Net revenues for Kraft Foods Inc., increased 20 percent.
“Oil and food companies are seeing increasing profits, yet they are blaming the corn farmer for food price increases,” Averhoff said. “Those numbers just do not add up.” The actual farm value of a product represents only 19 percent of each food dollar.
A recent Iowa State University studying found that ethanol keeps gas prices 29 to 40 cents lower than they would be otherwise. According to the International Energy Administration, replacing the amount of ethanol used in the United States and Europe over the past three years would require one million barrels of oil a day.
“We seem to be overlooking the fact that gas prices are through the roof,” Averhoff said. “High energy prices are undoubtedly affecting all facets of our economy, including increasing production costs for farmers across the country. Reducing ethanol production will only increase energy costs for everyone.”