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The U.S. Secretary of Agriculture has a difference of opinion with the Grocery Manufacturers Association.

During a Monday press conference, Secretary Ed Schafer said he had talked to the people who have “initiated these underground things that have been going on” to influence public opinion about ethanol incentives and found that while they understand that higher energy and transportation costs are the driving factor for increased food prices, they think “it’s easier” to target corn and ethanol.

“The change in the Renewable Fuels Standard, the change in the (ethanol) tariff or duty, isn’t going to effect food prices,” Schafer said. “We need to focus on things that will actually have an effect, instead of a short-term political solution we need to look long-term, because we have a long-term problem here.”

When asked directly if he was referring to the Grocery Manufacturers Association campaign against ethanol that was revealed last week by the Capitol Hill publication Roll Call and publicized by Senator Charles Grassley (R-IA) and others, Schafer said yes.

“Clearly, we have a difference of opinion with GMA,” said Schafer. “They are a trade organization driven by their membership and evidently that is the course they chose to take, not one that I would take.”

Schafer did say that they were now talking about “sharing information” with GMA. “I would just as soon we share information ahead of the fact,” he said.

Armed with power points and statistics, officials with the U.S. Department of Agriculture held a press conference in Washington DC Monday to discuss the case for producing both food and fuel in the United States.

“We think the time has come for USDA to join in the public conversation about the relationship between food prices and biofuels,” said Agriculture Secretary Ed Schafer. “We want to offer our perspective and what has happened in the marketplace, to share our data and the analysis of what has happened.”

Presenting the data was USDA chief economist Dr. Joe Glauber, who pointed out that all commodity prices have risen in the past year, not just food prices. “We certainly don’t want to minimize what’s going on with ethanol, because it is a very important factor in today’s market, but it’s important to discuss it in its proper context,” Glauber said. He noted that all commodities are up 47 percent, food is up 46 percent, and oil is up 68 percent.

The factors Glauber says have contributed to higher food prices are economic growth, weather, export restrictions, higher food marketing and transportation costs, and finally, increases in biofuels.

An economic analysis of the pass-through for an increase in corn prices on the Consumer Price Index (CPI) shows that a 50 percent increase in corn prices raises the CPI less than one percent, but Glauber says, “It’s a difficult thing to sort out how much of the increase in corn prices was necessarily due to ethanol.”

However, he says the Council of Economic Advisers estimates the total global increase in corn-based ethanol production accounts for only about three percent of the recent increase in global food prices.

Link to USDA power point presentation slides.