Growers providing Food and Fuel

Maryland Grain Producers

FOOD AND FUEL

If the increase in corn-based ethanol production accounts for only 3% of overall food price increases, what is the 97% cause?

Energy - Inflation - Weather - Demand - Labor

The single largest factor is energy
Higher fuel prices increase the cost of production, transport, wages and packaging, the main cost of retail food. For example, a $3 box of cornflakes contains 15 ounces of corn that cost 8 cents when bought from the farmer. So, farm commodity prices have little effect on retail prices. But the effect of oil price increases can be huge, as it impacts every phase of planting crops, harvesting crops, shipping to processor, processing food, shipping to distributor, transporting to stores, and driving the food home.

A $1 per gallon increase in the price of gas has three times the impact on food prices as does a $1 per bushel increase in the price of corn (LECG, LLC)

How do your wages compare?

In 1949, corn prices averaged $1.24 per bushel. Now, corn futures are over $6 per bushel.
That’s an increase of 484 percent in 59 years.

In 1949, minimum wage was $0.75 per hour, while today it is $5.85 per hour.
That's an increase of 780 percent in 59 years.

In 1949, oil averaged $2.54 per barrel. It’s more than $130 per barrel today.
That’s an increase of 5,118 percent in the same 59 years.

How strong is the link between commodity prices and our food prices?
Respected economists Informa Economics concluded that there has “historically been very little relationship between corn prices and consumer food prices....the statistical evidence does not support a conclusion that the growth in the ethanol industry is driving consumer prices higher.” Only 4% of the change in the food CPI is “explained” by fluctuations in nearby corn futures prices. There is no one factor but a “complex and interrelated set of factors that contribute to food prices.”

What if biofuels weren't part of our nation's energy solution?
You would be paying a lot more at the pump. According to Merrill Lynch analysts, without the biofuel programs, the price of oil would be about $13 a barrel higher than it is now. A $13 savings for each barrel could save the U.S. $65 billion in foreign oil payments.

For someone driving 15,000 miles per year with a vehicle that gets 20 mpg,
the savings in fuel costs - thanks to ethanol in the market - is $342 per year.

Get the Facts: (click on title for PDF document)

	Introductory Backgrounder This document clarifies how corn ethanol has little impact on retail food prices, helps bring down the cost of gasoline at the pump and benefits our domestic economy.
	U.S. Corn Industry Statistics In 2007, corn growers produced a record harvest of 13.1 billion bushels, providing for a sizable surplus and record exports. This document is updated monthly with the latest figures from the U.S. Department of Agriculture.
	A Tale of Two Corns Most American consumers don’t realize the key differences between field and sweet corn, and why 99 percent of corn grown is not the kind you’ll find at your local farmer’s market.
	Using Technology to Feed and Fuel the World New technologies are allowing U.S. corn farmers to produce substantially more corn per acre of land in a sustainable way, thus helping to meet growing demand for food and fuel.
	Top Ten Myths about Corn and Ethanol This one-page document exposes the top ten myths about corn and ethanol.
	Ten Gas Saving Tips
	U.S. Department of Agriculture Food and Fuel Facts