Recent increases in food prices are not related to earlier increases in prices of grains used to make biofuels, such as rapidly expanding corn-based ethanol and soy-based biodiesel, reported Phyllis J. Griekspoor of the Wichita Eagle.
"Yes, corn and grain prices have increased, in part because of the demand for corn to produce ethanol. But growing demand in Asia also has affected prices, as have adverse weather conditions in major corn growing areas," Griekspoor wrote. "Food prices, in reality, are edging up only 1.5 percent more than they did last year and the year before, an annual rate of increase between 3 and 4 percent, according to the Economic Research Service of the U.S. Department of Agriculture." ERS economist Ephraim Leibtag told the Eagle reporter that grain prices have an impact on animal-feed costs, which that causes small increases in retail prices, "but feed is such a small part of the overall price that it really isn't a driver."
Only about 20 percent of the U.S. consumer's food dollar goes to pay for the raw materials received from the farmer," Griekspoor reported. "Labor used by manufacturers, wholesalers, retailers and eating establishments accounts for nearly 40 cents of every food dollar." Ed Maxiner, an editor with the Kiplinger Agricultural Letter, told the Eagle that the single greatest contributor to higher food prices is energy, because ""Fuel contributes costs to food at every step." Other factors include drought and a dramatic increase in worldwide demand for human food and livestock feed, driven by a rapidly expanding middle class in Asia.
Griekspoor's July 1 article is available for a fee from the archives of the Eagle.
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