Colorado Corn Cultivating Opportunities

News of rising food prices has dominated newspaper headlines in recent weeks. Some, including members of Congress, have seized the opportunity to bash corn-based ethanol production as a major culprit. That criticism is ill-conceived.

Before people take a knife and fork to corn growers, they might want to digest information contained in a recent Texas A&M study on the subject.

Analysts, in the study "Effects of Ethanol on Texas Food & Feed," looked into the causes of rising food costs.

Their conclusion? The nation's corn growers are not the boogeyman that some think. Higher corn prices have had "a small effect" on some food items like soda, cereals and foods made from high-fructose corn syrup.

But for others, like bread, eggs and milk, their higher costs are largely unrelated to ethanol production and the price of corn, according to the study.

Instead, researchers say that labor costs play more of a role today. They also indicate that fundamental supply/demand relationships in the world market are major factors in food inflation and food supply shortages in some parts of the world. In many cases, because of the structure of the agricultural industry and production cycles, passing on higher costs from the farm level is not possible.

The American Farm Bureau Federation states that the farmer's share of the retail food dollar has remained about 25 percent since the 1970s. Increasing costs are tacked on after food leaves the farm - for energy, transportation, marketing and labor.

Farm Bureau President Bob Stallman noted in an April 30 news release that petroleum-based energy is the major culprit for higher domestic food prices. He said 44 percent of rising food costs is due to the soaring costs for energy.

Texas A&M researchers agree. They say that higher fuel prices, both for oil and natural gas, take a big bite out of the costs necessary for our food supply. They impact packaging, transportation and energy components.

With respect to labor, the Texas A&M study indicated that labor costs account for twice as much as the farmgate share of every dollar spent.

The nation's ethanol industry has defended corn growers and ethanol producers against the critics.

Toni Nuernberg, executive director of the Ethanol Promotion and Information Council, recently responded to news reports that blasted biofuels, such as ethanol, for causing food shortages and skyrocketing food prices.

"We live in a global economy where drought, population growth, growing protein demand in developing countries, war, transportation costs, crop acreage shifts and many other factors affect food prices and supplies," Nuernberg said. "Ethanol does not take food from the mouths of starving people."

Many of the complex factors that are setting the table for higher food prices have to do with factors far beyond the control of U.S. farmers. Demand for food is surging in countries like China and India. That is one of the reasons rice prices have shot up on the world market in the past few months. Tight world supplies of grain crops have been affected by severe weather, including drought in Australia.

It is important to keep a number of issues in perspective in the debate about food prices. First, there is no food shortage in the United States. There's plenty of high-quality food to go around. Compared to what consumers in most other countries pay, Americans continue to get a bargain at the grocery store.

The nation's ethanol industry is not fixated on corn-based ethanol. Most ethanol producers who take the long-term view, know that their industry is not sustainable without other feedstock options.

There is considerable research to improve the future of cellulosic ethanol from non-food crop sources like switchgrass, crop waste and other renewable biomass.

Farm Bureau's Bob Stallman believes that affordable food and renewable fuel can coexist.

Bashing ethanol, he said, is not warranted because it is "not the culprit that American consumers are being led to believe."

Unfortunately, as long as consumers keep believing true ethanol - and higher crop prices - are the culprits for their higher grocery bills, then farmers will be the victims of this public relations battle.