Perspective on rising food prices

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By The Staff

During the last several months we have seen more attention focused on increasing prices of food products we use to feed our families. Some of the attention has accurately detailed market forces responsible for the majority of the price increases. However, some have painted a picture not completely accurate. We hope to share some facts about food and food prices.

First, we need to remember that Americans enjoy the safest, most abundant and most affordable supply of food in the world. The average American farmer produces enough food today to feed 144 people in the United States and other countries. We should also remember there is no food shortage in this country, but rather we have plentiful supplies of food in all major food groups.

Some reports have indicated rising commodity prices are to blame for price increases at the grocery store. However, it is interesting to note there are incredibly small amounts of farm commodities in most processed foods. For instance, according to the Kentucky Farm Bureau Federation roughly 8 cents worth of corn is in a $3.30 box of Corn Flakes. Also, there is just 16 cents worth of wheat in a 20-ounce loaf of bread costing $1.78. Higher energy costs, reflecting the price of oil, gasoline and diesel, along with higher labor costs, play a larger combined role in food price increases than commodity levels. Of this year’s food price rise, 44 percent is due to energy while 19 percent pertains to higher labor cost, according to the U. S. Department of Agriculture.

Ethanol has received its fair share of blame for food price increases. While about one-fourth of the U.S. corn crop goes into ethanol production, there is plenty of corn for livestock feeding, food production and exports. In fact one-third of the livestock feed value of corn used in the production of ethanol, including 100 percent of the protein, is recovered in the form of distillers dried grains that are marketed as a high quality feed to livestock producers. Worldwide, only 2 percent of the corn supply goes into ethanol. Ethanol actually helps hold down the retail cost of gasoline, resulting in a 35 to 40 cent-per-gallon savings compared to what those prices would be if that much more oil was needed to meet current demand. That means U.S. consumers will spend about $50 billion less for their fuel this year because of ethanol.

Another factor that affects food prices is the spike in demand from developing nations like China, Indonesia and India. As disposable income increases in these developing economies, their demand for certain commodities also increases. According to the American Farm Bureau Federation, per capita consumption of meat in China doubled between 1990 and 2005 and is still growing. This increase in demand plays a role in the overall rise in food prices.

As noted above, there are many factors impacting food prices. Although we’ve only discussed a few of these factors, it is clearly inaccurate to blame higher retail food prices primarily on rising agricultural commodity prices.

America’s farmers are the most productive in the world and strive to produce an abundant supply of food for consumers here and abroad.

The views expressed in this column may not necessarily represent the views of The Oldham Era.