Biofuels Not Behind High Food Cost

LANSING - May 1/08 - MFB -- Rising food costs in the United States and overseas are receiving a great deal of attention, and a range of complex factors are behind this relatively new phenomenon, according to American Farm Bureau Federation President (AFBF) Bob Stallman. He said ethanol is "not the culprit that American consumers are being led to believe," and stressed that renewable fuel and affordable food can coexist.

"We want to make sure that America's consumers have a clear picture of this volatile and very complicated food price situation," said Stallman speaking at an AFBF news conference in Washington, D.C. on Wednesday. "Farmers are also deeply concerned about the issue of hunger, both on the global scale and here at home. We want to ensure that food is available and affordable to all global citizens.

"Having said that, I want to assure everyone that in the United States of America, there is not a food shortage. Our nation's productive and efficient farm families continue to produce a full range of healthy and abundant foods and we will continue to do so."

Farm Bureau analysis of the costs of food production and marketing shows petroleum-based energy is the primary factor driving domestic food prices. Forty-four% of rising food costs is due to energy costs, according to AFBF.

"This means energy sources like natural gas, oil and gasoline," Stallman said.

"After many commodities leave the farm gate, high costs for energy, fuel and transportation are added and passed onto the consumer," he noted. "Increased retail prices can especially be seen on highly processed foods."

The farmer's share of the retail food dollar has hovered around 25% since the 1970s. The larger portion of the consumer's food dollar goes to pay for processing, transporting and marketing food products after they leave the farm.

In addition, Stallman said world food prices are escalating because of other complex issues such as growing world demand, particularly in nations such as China and India, as well as lower supplies due to droughts elsewhere in the world.

Stallman stressed that market forces would lead to increased food production by farmers worldwide, thus lowering prices. He cautioned against governments enacting policies that would intervene in markets, saying such measures would be counterproductive to securing prices that are more moderate globally.

Copyright (c) 2008 Michigan Farm Bureau