Americans who are having difficulty feeding their families during these tough economic times are already well aware of the increase in food prices over the last few years, which have added an additional strain to those who are trying to make ends meet.
There have been multiple causes suggested for this problem – rising demand for food, weather-related issues, etc. – but one supposed reason that has stuck with consumers and many in the media is the increase in production of biofuels.
According to data recently released by the U.S. Bureau of Labor Statistics, food prices ticked up .2 percent last month and are up 6 percent over the past year. At the same time, energy costs fell 17 percent and transportation expenses dropped 10 percent in November, in addition to corn prices dropping 53 percent since their peak price in June. Even with the increase in food prices, the overall Consumer Price Index (CPI) decreased 1.7 percent in November.
But despite the evidence showing that corn and energy costs have gone down dramatically, large food companies, through their trade association, the Grocery Manufacturers Association (GMA), have continued to push the notion that it is ethanol that is driving up food prices.
Their argument centered on the premise that biofuels production increased the demand and cost of corn, which forced food producers to raise prices for consumers. However, while corn prices were going up, Texas A&M University and others stuck to their claim that corn does not have much impact on corn prices. In fact, a box of Corn Flakes contains fewer than four cents worth of corn, making it nearly impossible for corn prices to have any meaningful impact on similar food products – an assertion that has been proven correct by recent data.
The GMA has a good reason to blame biofuels like ethanol, however: it keeps everyone’s eyes off the real culprit. Big food companies have quietly been making record profits while food prices have skyrocketed, much the same way Big Oil companies were making record profits while blaming biofuels for the increase in gas prices.
The fact is, biofuels like ethanol are better for the environment, the economy and our nation’s energy independence, and while they may not be the silver bullet for all our energy needs, they deserve to play a role in our nation’s energy future.
With this new data on food, energy, and corn prices, let’s hope the food vs. fuel myth is finally put to rest. But in case it isn’t, the next time you hear about an organization complaining that ethanol is causing higher food prices, just remember who the source is.
Joshua Morby is the executive director of the Wisconsin Bio Industry Alliance, a nonprofit corporation that supports the development of bio-based renewable energy, power and products in Wisconsin. For more information, visit www.wisconsinbioindustry.com.
