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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