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Montana Farm Bureau critical of recent food cost and ethanol production criticisms

The Montana Farm Bureau has spoken out on two large agricultural misconceptions that have recently been in the news about the high cost of food and producing ethanol.

“Both of these criticisms by mainstream media reflect poorly on hard-working farmers and ranchers,” said MFBF President Dave McClure, a wheat and beef producer from Lewistown. “It’s a misconception that farmers and ranchers are reaping huge benefits—and adding to—the higher retail prices for food products made from farm commodities.”

What’s really contributing to the price increase is not an increase in biofuel production; in fact, it’s the converse. After corn, wheat, soybeans, milk and livestock leave the farm, the ever-higher costs for energy, fuel and transportation are what is being passed along to the consumers by the processors. Runaway energy prices are a major contributing factor behind the higher retail cost of food.

“As for what the farmer receives, he’s been receiving about 25 percent of the retail food dollar since the 1970s, increasing slightly in the last couple of years,” McClure notes. “Also, it’s interesting that less than 10 percent of the U.S. corn crop is used for corn-based foods consumed by humans, such as corn meal, cornstarch and breakfast cereals.”

Today, farmers are receiving about $5.50/bushel for a cash corn price, while the value of corn in each box of corn flakes averages 7.9 cents. When corn flakes cost about $3.30 for an 18-ounce box at the supermarket, that translates into the farmer receiving just 2 percent of the retail price. At the cash price of $9.10 per bushel, farmers receive about 16 cents for the wheat used to produce a 20-ounce loaf of bread.

“As for ethanol being a big scam, all I can say is remember 9/11 and how everyone was crying for a domestic energy supply? As a nation, we spend $1.4 billion daily to feed the foreign oil habit. Ethanol comes along, produced in America by American farmers and boosting economies in farm communities—and it’s a clean burning fuel—and yet it’s now under attack. American renewable fuel producers supplied nearly seven billion gallons of ethanol in 2007, and the industry is on track to meet a target of 36 billion gallons of renewable fuels of all types by 2022,” McClure points out. “Ethanol is just the start as technologies develop for making fuels from all sorts of items, from feedstuffs to urban waste.”

McClure quotes the American Coalition on Ethanol that put out a report saying gasoline prices would be 6 to 9 cents per gallon higher were it not for ethanol. A recent price report by Axxis Petroleum and the Oil Price Information Service says ethanol for blending is selling for as much as 10 to 35 cents lower than gasoline. “In addition, ethanol can take some credit that the price of gasoline isn’t rising as quickly as the price of diesel,” McClure says.

“Americans should be proud and supportive that our farmers and ranchers are doing such a fine job continuing to grow food that is still the most affordable in the world—even with high energy costs—and they are producing an admirable amount of commodities that can be turned into clean-burning fuel. Instead of complaining about costs, the public should be praising our ag producers,” McClure concludes.

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