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Corn+Soybean Digest

NCGA View: Despite Critics, Research Clear on Food Inflation

It would be nice to be a mouse in the boardroom at the next meeting of the Grocery Manufacturers Association (GMA). Internal conflict within the organization over the ongoing public relations attacks on corn farmers and ethanol might prove enlightening.

While this struggle plays out we can only hope reason will win the day and the folly of the food vs. fuel fiasco becomes clear. Thus far, the unhappy members of GMA haven’t been able to bring enough pressure to bear to reel in the rogues in the organization.

Serious damage has already been done to the critical relationship between the nation’s farmers and the people who turn these resources into finished food products for consumers. Even more evident is that GMA is now driven by a philosophy without vision.

According to the Kiplinger Ag Letter, “the food vs. fuel protest against ethanol is proving to have little merit,” noting that even though corn use for ethanol rose 40% last year, and corn supplies were tighter than expected, the price of corn dropped.

In fact, ag commodities from corn to veggies to meat make up only 20% of consumer food costs. The Congressional Budget Office goes even further, reporting that ethanol’s impact on 2008 corn prices amounted to less than one percentage point of the total 5.1% rise in food prices last year. Their ability to keep the public focus on this miniscule component rather than the bigger question of the driver of the other 80-90% of food cost increases not linked to corn provides sleight of hand that would make David Blaine or Penn and Teller proud. I guess millions of dollars and the right PR firm could make a Cadillac seem like a Pinto.

At this rate, it’s not hard to project corn and ethanol’s detractors will soon spend more on propaganda to bash the nation’s most important crop than consumers are paying in increased costs at their local market. Not a very constructive investment, unless their ultimate goals is to trounce corn prices back to the stone age and drive family farmers out of business.

Their most recent attempt to keep this comedy of errors on the media stage is a pair of non-peer-reviewed works of fiction that they dare to call studies. Both are done by members of what should be called the Cheap Corn Coalition (GMA, the Turkey Federation and the American Meat Institute). They boldly state that raising the allowable limits of ethanol in gasoline to 15% will result in higher commodity costs for livestock, poultry and food producers and higher food prices for consumers. One study was directly funded by GMA, the other the Turkey Federation.

This centerpiece of their argument is fallacious because the current proposal before the EPA would allow a move from 10% ethanol blends up to 15% blends in markets where it makes sense. It is not a broad mandate, but an allowance.

Ethanol critics argue that doing so poses a major shortfall of availability of corn in the next five years. In point of fact ethanol production will require an increasing amount of corn.

Actually, this is a good thing – because thus far expanded ethanol production has come from record corn-production gains. The real experts say we are on the precipice of yield growth here-to-for unseen by man. If we are going to see yields grow worldwide, and have the capacity to make 17 billion gallons of ethanol in the U.S. within 20 years with no change to corn acres, this seems like a win-win for family farmers and energy beleaguered Americans.

If GMA and its Don Quixote cohorts can’t reform themselves, the American public at least deserves to know the evil dragon they are concocting is really a windmill with the capability to power this nation. It’s time to let the fantasy go.

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