Grain prices unfairly shoulder food-costs blame

2011-03-24T08:18:00Z Grain prices unfairly shoulder food-costs blameBy Dwayne Siekman Farm and Ranch Guide
March 24, 2011 8:18 am  • 

There has been a recent influx of media stories attributing increased crop market prices translating to increased food costs for consumers. Some blame ethanol production for increased corn prices. Some note the global wheat shortage as increasing wheat food prices.

Though several factors contribute to increased food costs, farm commodities continually receive the blame, but farm products represent only 19 percent of retail food prices. Prices of many agricultural commodities are still less than the levels that sparked 2008 food riots and real food prices have decreased 75 percent since 1950.

Although commodity prices have increased, longer-term inflation expectations have remained stable and measures of underlying inflation have been trending downward, the federal government reported in January.

On behalf of Ohio grain farmers and grain farmers throughout the U.S., I'm responsible to help raise awareness about the truths of food-price inflation.

Yes, grain prices are at increased levels. So, too, are the costs of supplementary root causes of increased grocery store prices including labor, energy, product marketing/packaging/shipping and speculation of the commodity markets.

In fact, producer prices increased 3.6 percent throughout the past 12 months, according to a recent Bloomberg story. It also noted that growing economies in Asia and Latin America are boosting global demand for oil and other imported commodities, which increases input costs for American businesses.

Another factor? Prices of goods imported into the U.S. increased 1.5 percent in January. Add a weak U.S. dollar and a growing world population, increasing about 1.1 percent annually, and food demand becomes greater still.

And let's not omit oil costs - how quickly oil is dismissed from the equation. Crude oil is now selling at more than $90 a barrel and will only increase given the current climate in Egypt, Libya and other countries in those regions. Energy prices rose 1.8 percent in January alone.

Our farmers continue to grow corn and wheat to supply national and international markets, while facing the same increased production costs as every other American business - using less land and resources than ever before. The 2010 near-record supply of grains is ample enough to satisfy all grain markets and farmers are bracing to plant more to ensure supply.

While it's been too easy for too long to point the finger, agriculture is undeserving of such direct, misguided blame. Grain farming in Ohio supports an estimated 33,412 jobs, generates nearly $359 million in labor income, contributes $1,457,184,768 to our state's GDP (value added) and its crop value is more than $3.5 billion.

I'm hopeful that as people become educated about the multiple contributing factors of food-cost inflation, our farming community will be vindicated. (Siekman is CEO of the Ohio Corn & Wheat Growers Association.)

Copyright 2015 Farm and Ranch Guide. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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