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Corn+Soybean Digest

Ethanol Not Cause of high Food Prices

Simply put, growing U.S. ethanol industry is not the cause of food price inflation, according to a new statistical analysis by Informa Economics, Memphis, TN.

The report finds a comparatively “weak correlation” between corn prices and overall food costs. In fact, just 4% of the change in the food Consumer Price Index (CPI) could be attributed to fluctuations in the price of corn.

“The statistical analysis plainly details that energy-intensive activities such as processing, packaging and transporting, as well as the cost of labor, have a far greater impact on consumer food bills than the price of grain,” says Informa Chairman and Chief Executive Officer Bruce Scherr.

The study points out that the proportion of the average American's disposable income spent on food has declined steadily over the last half-century, from 21% of disposable income in 1950 to below 10% in 2006.

You can find the “Analysis of Potential Causes of Consumer Food Price Inflation,” at Informa's Web site: www.informaecon.com.

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