Critics of renewable fuel (chiefly the oil industry) love to claim that growing our own fuel means higher food prices for American consumers. They’re dead wrong, and there’s still a lot of misinformation out there regarding the relationship between corn and the price of food in the grocery store. Let’s take a look:
- The price of corn is the lowest it’s been in three years, yet food prices have not come down. This year USDA is forecasting a record breaking corn crop in the US - just this week they updated their inventory estimate by an increase of 25%! Accordingly we have reached a three year low drop in corn prices- corn traded this month at$4.41 a bushel compared to the 2012 peak of $8.49.
- Only 16% of grocery costs can be traced back to farm inputs, like corn or wheat. The rest goes to costs like energy, transportation, packaging, marketing and labor.
- Oil, not corn, has been driving up global food prices. While the price of corn is one of many, complicated factors that go into grocery costs, researchers at the World Bank identified crude oil as the number one determinant of global food prices. The cost of energy from oil is integral to so much of the 84% we discussed in #2 (above) that when the price of oil goes up, food prices follow closely behind.
The facts could not be more clear: the agricultural inputs that become renewable fuel simply do not have enough influence on food prices to make a meaningful difference. The only way to spare consumers pain at the grocery store is to end our oil dependence and protect policies that promote alternatives, like the Renewable Fuel Standard.
Read the article as originally posted here.