Agri – Culture: The Price We Pay

More than six billion people on the globe have placed a fair demand on the food supply. The demand for cereal grains has driven corn, wheat and soybean prices to an all time high. Farmers are actually getting paid respectfully for their crops!

However, the price conscious shopper cringes at the idea of paying 25 percent more for eggs and 17 percent more for milk. Is the high price of corn, wheat and soybeans really driving up the price other food commodities?

The simple answer is yes-partially, but it would be fool hardy to just stop there and blame the farmer. Of the total price of a box of Cornflakes cereal, approximately 4 cents of corn goes into that box. The recent increase of commodity prices has drastically (sarcasm) raised the price of corn in that box to 5 cents. Other products include a slightly greater increase in the price of grain that went into the final product but not so drastic to account for the added dollars that we are paying at the cash register.

Food prices around the globe are on the increase potentially leading to more hunger and food shortages in areas that can’t afford the cost.

What is causing food prices to increase? The average American is spending an addition 4.5% of their annual income on food. (Of course, the U.S. still has one of the cheapest and safest food supplies on the planet.) The largest factor to consider is the increased cost of fuel. With crude oil at more than $100 a barrel, the price of Cornflakes is bound to increase. The transportation costs of that box are phenomenal, and then figure in the energy consumed to package it, market it, distribute it, etc.

Progression of thought asks, is it possible to decrease costs and supplement our consumption of crude oil with other energy sources like biodiesel? Opponents say that that would only increase the problem by taking food away from mouths to burn in engines. Not so. According to the National Corn Growers Association, between 2002 and 2007 the bushels of corn used for ethanol increased from 1,093 Mbu to 3,010 Mbu It would stand to reason that if the amount of corn going to ethanol has increased by that much then food consumers are suffering for lack of corn. But, in that same time the amount of corn produced increased from 10,573 Mbu to 14,393 Mbu. That means that despite an increase in the amount of corn being diverted to ethanol production there has been a drastic increase in the amount of corn available for human consumption.

It is a complicated issue with no one entity to lay blame. I’m not suggesting that we should just lie down and submit to high food and fuel prices. Nor am I saying that biodiesel or ethanol will be our saving graces. At least with a little bit of awareness about the subject, we can be more educated consumers.