Corn prices have little to do with food price increases

Farmers across the nation are taking a bad rap as strong corn prices, fueled by the increasing demand for ethanol, are being blamed for higher food costs.

Look elsewhere to blame, suggested Richard Cortese, Bell County corn farmer and state board member of the Texas Farm Bureau. Corn prices are higher, but the high cost of energy is the real culprit behind increasing food costs, he said.

“When crude oil moved from $40 to $70 a barrel, consumers faced a 75 percent increase in fuel prices,” Cortese said. “Farmers faced those same increases and were hit even harder as oil is used in everything from fuel to fertilizer and other inputs.”

More important, however, high oil prices are causing significant increases in the largest costs of food production — processing, packing and shipping each food product to market. In fact, Cortese said, the value of corn is just a tiny fraction of a product’s cost. And only a small segment of the food market relies on corn as an input.

“A 14-ounce box of corn flakes costs about $2.97 to $3.50. “When corn is $2 per bushel, a box of corn flakes includes about 2.2 cents worth of corn. At $4 a bushel, the amount of corn in that cereal costs about 4.4 cents. If you took out the ethanol factor completely, food would still cost more.”

Less than 12 percent of the nation’s field corn crop is processed directly into human food products in the United States. The majority of field corn is exported, processed into ethanol and its co-products, or fed to livestock.

Cortese admitted that livestock producers are paying more for feed for their animals, but said he hoped the use of distillers dried grains, a byproduct of ethanol production, will lessen the impact of corn prices on feed costs.

In this year of too much of a good thing — rain, and its associated quality problems with the Texas corn crop — and higher input costs, any real increase in profits for many corn farmers will be marginal at best, Cortese said.

“I think it’s very important that our agricultural producers make enough money to stay in business. And the prices we’ve had in the past, we’ve not been able to do that.

“Now, because of ethanol, we’re getting a little bit more from the marketplace. And I think U.S. consumers need to recognize they still enjoy the lowest priced, safest, and best quality food in the world.”

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