Grainnet

New Food and Water Watch Report Says Food and Meat Processors Use 'Ethanol Smokescreen' to Increase Consumer Food Prices

Despite repeated claims to the contrary, the title of a new report from environmental group Food and Water Watch states clearly, “Corn Prices Do Not Drive Grocery Inflation.”

According to the report, “Although corn prices have risen over the past year in part as a result of increased ethanol demand, the correlation between crop prices and retail grocery prices remains elusive.”

The group also notes that, “Now, food and meat processors are using the ethanol smokescreen to justify grocery price increases that are unlikely to decline when corn’s historically volatile price falls.”

In a release from Food and Water Watch, the group outlined the reports major conclusions:

• Contrary to widespread media reports, the long-term farmgate price of corn has fluctuated significantly and has exceeded oft-cited $2 per bushel during three quarters of the months between 1980 and 2006.

• The real, inflation-adjusted price of corn has trended downwards since 1980 from an average of $6 per bushel in the early 1980s to $2.37 two decades later.

• During periods of farmgate corn price increases similar to the recent rise, there has been little interplay with retail food costs – in many cases retail food prices fell as corn prices rose.

Additionally, other experts have pointed to poor growing conditions, such as the wheat-producing areas of Australia, globally increasing demand for meat and dairy products particularly, and record energy prices across the globe as having a much greater impact on food prices than the price of corn.

For more information, see the entire Relative Impact of Corn and Energy Prices in the Grocery Aisle article or the American Farm Bureau's Fuels versus Food: Is it Rhetoric or Reality? article.