Blame Energy Prices for Higher Food Costs

Cindy Zimmerman

According to a new analysis of food, energy and corn prices conducted by John Urbanchuk of LECG, LLC, “rising energy prices had a more significant impact on food prices than did corn.” In fact, rising energy prices have twice the impact on the Consumer Price Index (CPI) for food than does the price of corn, according to the report.

LECG“Energy costs have a much greater impact on consumer food costs as they impact every single food product on the shelf,” said Urbanchuk. “Energy is required to produce, process, package and ship each food item. Conversely, corn prices impact just a small segment of the food market as not all products rely on corn for production. While it may be more sensational to lay the blame for rising food costs on corn prices, the facts don’t support that conclusion. By a factor of two-to-one, energy prices are the chief factor determining what American families pay at the grocery store.”

RFAThe Renewable Fuels Association held a press conference to announce the results of the study. “Critics of ethanol, including those in the animal feeding and oil industries, are engaging in baseless scare tactics to convince Americans that ethanol production will irreversibly increase their grocery bills,” said RFA president Bob Dinneen. “Ultimately, the market will adjust and all those in the food, fuel and fiber industry will be able to prosper.”

NCGAMuch of the debate has been centered on the notion that the U.S. will not be able to produce enough corn to satisfy all markets, creating shortages and intensifying competition that will continuously drive the price of corn higher. However, industry officials say advancements in seed, farming and ethanol technologies are allowing American farmers to continue feeding the world while helping to fuel our nation.

“There is no conflict between food and fuel—we can produce both,” said Ken McCauley, president of the National Corn Growers Association.

Listen to press conference here: [audio:]

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