WBIA BLOG

The numbers don’t add up

The Renewable Fuels Association recently compiled a report that examined the nonexistent relationship between corn prices and retail food prices for dairy, poultry and eggs, pork and beef and found that “fluctuations in corn prices do not significantly affect consumer food prices.” We also concluded that there is “no relationship between corn demand for ethanol and retail food prices.”

The report revealed:
Retail prices for key dairy items like milk and cheese have been largely unresponsive to changes in corn prices. In fact, since January 2011, milk and cheese prices have been negatively correlated to corn prices, meaning retail milk and cheese prices have tended to move in the opposite direction of movements in corn prices.
Retail prices for other items (like chicken legs, frozen whole turkey, fresh whole chicken) have risen steadily and smoothly since 2007. Wide swings in corn prices did not interrupt or affect the gradual trend toward higher prices for these items.
Retail prices for pork products have not shown any meaningful relationship to corn prices over the past seven years. It is well documented that the recent acceleration in pork and bacon prices has been driven by piglet casualties resulting from porcine epidemic diarrhea virus. These retail price increases have occurred at a time when corn prices have been plunging.
Retail ground beef prices have steadily and smoothly trended higher over the past seven years, showing no obvious response to wide swings in corn prices.

So, if there is no apparent link between corn prices and retail food prices what causes changes in food costs for American consumers?

Transportation costs.

Which, thanks to the ridiculous monopoly held by Big Oil, means that fuel prices and energy costs have a much bigger impact on the price of our food than any other single factor. Just how closely linked are petroleum prices and food costs?

Since 2000, the U.N. food index and world crude oil prices have had a near-perfect correlation (0.97 coefficient).

foodvfuel2014rfa

Thanks to our friends at the Renewable Fuels Association for their research.

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Big Oil’s misinformation

The long stated myth that ethanol is to blame for higher food prices has been most recently debunked by new data from the Food and Agriculture Organization of the United Nations’ international food price index.

According to the FAO, in the past year, domestic grain prices have gone down about 9 percent, but meat prices are over 20 percent higher – all of this in a time when national ethanol production has risen slightly in the US.

Big Oil is spending millions of dollars trying to con American consumers into believing that ethanol production raises the price of their food. They are basing their campaigns on lies and misinformation in an effort to limit consumer choices at the pump.

Domestic prices for corn and other grains are dropping quickly while meat prices for consumers are up 11.6 percent in the same time period. Clearly, grain pricing has little to do with what consumers end up paying as food prices in most of the US are up 2.5 percent compared to last year while farmers are struggling to make a profit.

“Corn prices are below the cost of production for most farmers, and ethanol is selling approximately $1 per gallon less than the gasoline on the wholesale marketplace,” said Tom Buis, CEO of Growth Energy. “The unrelenting deception coming from these trade associations to continue to perpetuate this lie to mask their growing profits at the expense of the American consumer is deplorable. Their greed and deception knows no boundaries. It’s time for Big Oil and its Big Food allies to begin telling the truth.”

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