It is an argument that comes up every Thanksgiving season: using corn for ethanol drives up food prices. Another study proves this is simply not true. Year after year, study after study continues to show that the renewable fuels sector does not impact the price or availability of food. Again this year, an independent analysis shows food prices are not impacted by commodity prices. Jeff Cooper, vice president of the Renewable Fuels Association, says it is really hard to notice any impact on consumer food prices from the expansion of the ethanol sector.
The study, done by Informa Economics, indicates that food prices were not impacted by the prices of corn or soybeans. “In fact, the inflation rate for grocers is about half of what it was before the RFS started in 2010,” said Cooper. Prior to 2010, grocery prices were averaging a yearly increase of 3.2%; since 2010 that has dropped to 1.8%.
Cooper says corn and other agricultural commodities make up such a small part of the consumer food dollar that changes in prices have little impact, “When you go into a grocery store and spend $100, only about $17.00 is going to cover the value of the farm products. The rest is accounted for by labor, packaging, advertising, transportation, and all those other supply chain related costs.” This is something to remember when someone at your Thanksgiving table bring up the food vs. fuel argument.