NFU: Ethanol and Grain Prices Do Not Affect Grocery Prices

14 01 2011
WASHINGTON (Jan. 13, 2011) – National Farmers Union (NFU) President Roger Johnson released the following statement in response to the U.S. Department of Agriculture’s (USDA) Jan. 12 report entitled, “World Corn Production, Consumption, and Stocks,” that indicated corn supplies were lower than expected. As a result of this report, critics are blaming ethanol for the increase in commodity prices and suggesting food prices will increase:
“While some will undoubtedly blame rising commodity prices and lower supplies on ethanol and biodiesel, this is not a ‘food versus fuel’ debate. There is plenty of corn to satisfy both America’s food needs as well as our energy needs.
“The recent increase in commodity prices will have very little affect on the cost of groceries. NFU’sFarmer’s Share data shows that less than two percent of the purchase price of a box of corn flakes is from the price of corn. A box of cornflakes costs approximately $3.79 at a grocery store. Of that, the farmer gets only seven cents. One bushel of corn can make approximately 60 boxes of corn flakes, so if the price of corn goes up a dollar, that will only tack on an additional one or two cents to the total cost of that box of cornflakes.
“While ethanol is not part of the problem, it can be part of the solution. Each year, the United States buys $300 billion in foreign oil. In these tough economic times, it is important to keep as much money as possible here at home. By increasing ethanol use, we can keep more of that $300 billion in the United States, without significantly affecting grocery bills. Rising oil prices mean it is even more critical that we increase our use of renewable fuels such as ethanol.”
NFU’s policy supports a balanced energy policy that seeks at least 25 percent renewable energy by 2025 for the United States while also protecting our nation’s environment. America’s agriculture sector can play a significant role in the push towards greater energy independence.



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