Stroll through the aisles at many grocery stores, and you're bound to see looks of bewilderment among shoppers who are finding it increasingly difficult to stretch their food dollars.
Prices have been on the rise, but it's not because Mr. Farmer is taking a larger slice of the action or because ethanol production has diverted too much corn from the human food chain, as some anti-agriculture activists insist.
These tired theories about rising food prices — that farmers are getting fat from overpriced breakfast cereal or that mixing corn-based ethanol with gasoline is creating a food shortage — have long been the centerpiece of the food vs. fuel debate, but they have no basis in fact.
Corn prices have plummeted. Last year, a bushel fetched almost $8, but today the prevailing price is about $4 per bushel — near the break-even point for many corn growers.
While corn markets have declined nearly 50 percent during the past 12 months, it's impossible to see a corresponding drop in corn products at the retail level. That's because perpetrators of the food vs. fuel myth have it wrong. It's not grain prices or ethanol that drive food prices, but an array of other factors, chief of which are the price of fuel and cost of transportation.
Very few Americans noticed when, in July, a study by ABF Economics, an agriculture and biofuels economics consultancy, found no direct correlation between the Renewable Fuels Standard — and thus increased ethanol production — and increasing food prices.
The finding backs up a 2010 World Bank study that cited higher oil prices as the leading cause of increased food prices globally, reversing the World Bank's earlier stance that linked increases to global biofuel policies.
The ABF Economics report uncovered the complexity of the multiple drivers behind increasing food prices. One of the main factors — high fuel prices — directly affects processing and transportation costs. The greater the cost of producing a product and transporting it to grocery shelves, the higher the price consumers will pay.
If the food vs. fuel people were correct, the 50-percent decline in corn prices — from nearly $8 per bushel one year ago to about $4 per bushel today — would be reflected at the supermarket.
Sadly, Mr. Farmer is taking a bath in the commodities markets, while consumers aren't getting any relief when they buy breakfast cereal at the supermarket.
Copyright Kearny (Neb.) Hub. Distributed by the Associated Press.