WASHINGTON, Sept. 8, 2014 – The Renewable Fuels Association (RFA) released a report today that further debunks the fictional food vs. fuel argument.

The report shows that while corn prices have dropped dramatically over the past two years, retail food prices of dairy, pork, poultry, eggs, and beef have remained steady or continue to increase. The report concluded, “… fluctuations in corn prices do not significantly affect consumer food prices.”

Bob Dinneen, president and CEO of the RFA, commented, “The food vs. fuel folks screamed to high heaven when the price of corn rose during the drought and immediately blamed high corn prices and ethanol for food price increases. However, these same critics remain suspiciously quiet now that corn prices have dropped, but retail food prices aren’t dropping along with them.”

He continued, “The food vs. fuel argument is just another misguided attack on biofuels and the Renewable Fuel Standard (RFS), which is reducing foreign oil dependence, lowering gas prices for consumers, and revitalizing rural America.”

The report examined a number of factors that contribute to food prices including the cost of food production, pointing to Citibank’s Sterling Smith who stated, “Corn prices may have come down 50 percent (from their highs), but that doesn’t mean a box of corn flakes will fall 50 percent in price. Much of the price of food comes from the processing and movement of food...”

The report also highlighted the role of crude oil in retail food prices, finding that “…every step in the food supply chain is significantly affected by energy cost – especially crude oil.”

The report compared corn prices to the price of dairy, pork, beef, poultry and egg products from January 2007 – July 2014, finding:

·         Retail prices for key dairy items like milk and cheese have been largely unresponsive to changes in corn prices. In fact, since January 2011, milk and cheese prices have been negatively correlated to corn prices, meaning retail milk and cheese prices have tended to move in the opposite direction of movements in corn prices.

·         Retail prices for other items (like chicken legs, frozen whole turkey, fresh whole chicken) have risen steadily and smoothly since 2007. Wide swings in corn prices did not interrupt or affect the gradual trend toward higher prices for these items.

·         Retail prices for pork products have not shown any meaningful relationship to corn prices over the past seven years. It is well documented that the recent acceleration in pork and bacon prices has been driven by piglet casualties resulting from Porcine Epidemic Diarrhea virus (PEDv). These retail price increases have occurred at a time when corn prices have been plunging.

·         Retail ground beef prices have steadily and smoothly trended higher over the past seven years, showing no obvious response to wide swings in corn prices.

Read the full report.


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