New Report Puts Food vs Fuel “to Bed”

Cindy Zimmerman

InformaThe price of corn has less to do with the price of food than many other factors, according to an extensive new study by Informa Economics based on 20 years of price data.

The Informa report identifies the so-called “marketing bill”—the portion of final food costs that excludes grains or other raw materials—as a key driver of the consumer price index (CPI) for food, largely due to rising energy and transportation costs. Another significant factor in consumers’ food bills is surging global demand for commodities.

The report finds a comparatively “weak correlation” between corn prices and overall food costs. In fact, just four percent of the change in the food CPI could be attributed to fluctuations in the price of corn. Simply put, growing U.S. ethanol industry is not the cause of food price inflation.

“This analysis puts to bed the argument that a growing domestic ethanol industry is solely responsible for rising consumer food prices,” said Informa Chairman and Chief Executive Officer Bruce Scherr. “The statistical analysis plainly details that energy-intensive activities such as processing, packaging and transporting, as well as the cost of labor, have a far greater impact on consumer food bills than the price of grain. It may be politically convenient to blame ethanol for rising food prices but it doesn’t make it factually accurate. As far as Informa is concerned, this
debate is settled.”

The Informa study was funded by the Renewable Fuels Foundation and during a Monday morning press conference chairman Bill Lee commented that “our friends in the food, livestock and petroleum industries have been you could say “super sizing” the impact commodity prices have on food,” and he hopes this report will “be the end of the disingenuous comments from the food and livestock industries about the impact of corn prices and ethanol on food prices.”

Informa press release
Complete study
Reuters story

Ethanol, News, RFA