Ethanol production's demand for corn is not a major factor in recent rises in food prices, according to an American Farm Bureau Federation economic report released recently. The group criticizes the "food vs. fuel" issue as one of rhetoric, saying weather and energy costs are the real culprits in increased food prices.
"Ethanol is unfairly getting a bad rap," says AFBF economist Terry Francl, "because people aren't looking at all the other factors that are involved in food prices."
AFBF points to an early freeze that damaged fruit and vegetable crops, low world supplies of wheat, milk producers' cutting back on production in response to last year's low prices and the rising cost of energy.
According to Francl, the value of corn usually is just a tiny fraction of a product's price. For example, the value of corn that goes into a box of corn flakes has been estimated to be 2.2 cents.
"Even if the cost of the corn doubled, it is hard to understand how this relates to an increase of 10 to 20 times that much in the price of a box of cereal," he says.