The occasion was marked as part of the Missouri Corn Growers Association (MCGA) annual meeting Tuesday in Jefferson City. CEO Gary Marshall, who has led the organization for over 23 years, was pleased at the turnout for the event. “We had a number of legislators that came in, I think we had over 50 that were registered, and we had a lot of growers there as well, so it was a great time to celebrate 25 years,” Marshall said.
MCGA honored 17 members of the Missouri state legislature with Friend of Corn Growers awards, including Representative Brian Munzlinger who served as chairman of the MCMC in 1993-94. That was the year that Missouri really took the lead in promoting ethanol by expanding use to over 16 percent of the state’s fuel, funding two feasibility studies for ethanol plants and introducing an E85 van at the Indianapolis 500.
Missouri corn growers headed to the state capitol after the meeting to present their legislators with breakfast for the next couple of months – four boxes of corn flakes containing a total of 12 cents worth of corn. MCMC Chairman Keith Witt says the idea was to show them the disparity between the corn prices and products containing corn. “The box of corn flakes costs $2.18, so we’re just putting a little visual to that,” said Witt. “It costs more for the transportation of the box of corn flakes than the actual corn.”
Janet Atkison of KMZU Radio in Carrollton was one of several farm broadcasters who attended the event, which also included a live broadcast of AgriTalk.
Listen to Janet’s report that she filed back to her station while the event was still on-going.
It is hard enough to forecast the next year, much less the next ten years, but that is what USDA’s Economic Research Service has attempted to do with its latest Long Term Agricultural Projections report released last week. Not surprisingly, they expect prospects for the agricultural sector in the near term to reflect adjustments to the global economic slowdown and the U.S. recession.
Among the projections for the next decade in corn, the report says “a gradual shift to corn away from other crops reflects the high levels of domestic corn-based ethanol production and gains in exports that keep corn demand and producer returns strong. Following a decline in 2008, corn acreage increases to 90 million acres by 2011 and remains at or above that level over the remainder of the projection period.”
ERS expects net farm income to initially decline from the highs of 2007 and 2008, yet still remain historically strong, rebounding to near-record levels in the latter part of the projections. Retail food prices are expected to continue to increase more than general inflation through 2011 (particularly meats in 2010 and 2011), but then food prices return to the longer term relationship of rising less than the general inflation rate over the remainder of the projection period.
Some radical environmental organizations held a press conference this week urging the federal government to stop promoting renewable fuels like ethanol and saying they would rather increase the use of imported oil. During the conference, Clean Air Task Force spokesman Jonathan Lewis told a reporter that “burning gasoline is better than increasing the production of corn ethanol.”
Listen to that soundbite here
The group representatives made claims that they were unable to back up with any specific facts when questioned and they offered no ideas for moving toward a renewable energy future, although they claim that is their ultimate goal. They simply want the production of corn ethanol halted because they question whether biofuels are capable of making a major contribution to reducing fossil fuel use.
This “policy announcement” by the groups – which also included the Environmental Working Group and Friends of the Earth – amounted to an unsubstantiated attack on American agriculture’s efforts to help move our nation toward energy independence. Not only did they say we should not produce corn ethanol, they claim that next generation biofuels using cellulose “can cause the same adverse environmental impacts as conventional ones while also presenting new dangers, such as those associated with synthetic biology.”
It reminds me of people who once thought the earth was flat and refused to move forward because they were afraid they would fall off the horizon if they did. To refuse to move toward a more sustainable, renewable energy future with a variety of options is simply irresponsible and proves they are not friends of the earth at all. Friends don’t let friends drill to drive.
Put this under the category of “Christmas miracles.”
An Associated Press story from Christmas eve shows a miraculous epiphany on the part of the Grocery Manufacturers Association that more than just ethanol production was to blame for higher food prices this year.
…since the midsummer price highs, the din of the food-vs.-fuel debate has since receded to a murmur, and even the Grocers Manufacturers Association, one of the most vocal biofuel critics, seems to be backing off a bit. Ethanol production is just one in seven sources of commodity price inflation, Scott Faber of the Grocers Manufacturers Association said. The rise in global demand, energy prices, speculation, the weak dollar export restrictions and poor weather also contributed to the surge in corn prices over the past three years, he added.
Texas Corn Producers Board Executive Director David Gibson has a great op-ed in the San Angelo paper this week about how the food companies continue to perpetuate the myth that ethanol has driven up food prices this year.
To hear the food companies tell it, the cause of rising food prices this year has been the high price of corn. The big food manufacturers have waged a yearlong, well-financed public relations campaign to blame ethanol for driving up the price of corn and grocery bills. It has been an effective message but it should be clear to everyone now that it simply isn’t true.
Since June, the price of corn has plunged more than 55 percent. A bushel of corn is now below $3.50, about the same price farmers received back in 1995 even though the cost of growing corn has soared in recent years. While corn prices were falling, ethanol production has been increasing every month, clear proof that ethanol is not driving corn prices higher. But cheap corn hasn’t resulted in lower food prices and food giants such as Kraft Foods and Kellogg’s have reported higher than expected earnings, due in large part to higher prices for consumers.
Gibson concludes: There is no way that our country can achieve its goal of energy independence without increasing ethanol production. The low price being paid for corn is bad news for farmers, some of whom will not be able to cover their production costs. But it proves we have enough corn for food and for ethanol to reduce foreign oil imports. Now we just have to wait for the big food manufacturers to give consumers a break at the grocery checkout line instead of pocketing larger profits.
The turkey industry has been one of the most vocal opponents of corn for ethanol production in the last year. So, it’s not surprising to see that the cost of the turkey is the largest contributor to the overall increase in the cost of the 2008 Thanksgiving dinner, according to the American Farm Bureau Federation’s annual survey.
The cost of a 16-pound turkey, at $19.09 or roughly $1.19 per pound, reflects an increase of 9 cents per pound, or a total of $1.46 per turkey compared to 2007. Meanwhile, a bushel of corn has decreased 21 percent from $4.28 on Nov. 21 last year to $3.39 on the same day this year (prices are for Dec. 2008 futures). However, big food companies are still blaming increased use of corn for ethanol production for the higher cost of Thanksgiving dinner.
What’s wrong with this picture? The Renewable Fuels Association did the math and found that only 1.4% of price for the typical holiday meal for 10 this Thanksgiving can be attributed to the U.S. ethanol industry’s demand for corn.
Here’s how they did the math: First, they determined the amount of corn required to produce the common Thanksgiving dinner items – including turkey, stuffing, peas, cranberry sauce, rolls and milk. About 31.5 pounds of corn, with a market value of approximately $2.50, would be required to produce those food items – since only the turkey and the milk require corn. The value of corn required to produce these products accounts for roughly 7.1 percent of the total retail price.
Finally, we examined ethanol’s impact on the price of corn, and in turn, on the price of the Thanksgiving meal. An October 23 Reuters article stated that the consensus among analysts is that the ethanol industry’s demand for corn has accounted for “around 20 percent” of recent corn prices. Thus, only 20 percent of the $2.46 worth of corn required to produce a Thanksgiving dinner for 10 can be attributed to ethanol.
The result is less than 50 cents – about 1.4 percent – and that is of the TOTAL retail price for the dinner.
Incidentally, the less than 6% increase in the Thanksgiving meal this year is still a bargain in anybody’s book. This year’s average cost of $44.61 is equivalent to $20.65 in 20-year inflation-adjusted dollars, according to Farm Bureau. That means the actual dollar cost of the Thanksgiving dinner has declined more than 8 percent since 1988.
Definitely something to be thankful for this year.
Earlier this year the whole focus was on commodity shortages – not enough wheat, smaller corn carryout. Now, all of the sudden, we are hearing that there are “big supplies” of wheat and corn.
That’s what Reuters is reporting today. “U.S. corn and wheat futures eased lower on Friday, extending heavy losses in the previous U.S. session, as grains remained under pressure from hefty global supplies and demand concerns in a deteriorating economy.”
Corn and soybean futures both dropped four percent in Thursday’s trade while wheat was down three percent. Reuters reports that corn was “feeling the squeeze in particular as traders took the view that the world was well supplied with feed grains and demand for ethanol production would be cut back.”
Corn has now dropped from a record high in June of $7.65 to the level it was trading at the start of 2007.
Big Food often suggests a “lag effect” exists before changes in commodity prices are reflected at the retail level (they say that’s why food prices haven’t come down, despite the plunge commodity prices). However, it is clear there was no “lag effect” in early 2007. When the producer price index (PPI) for farm products increased rapidly, food companies reacted quickly, as demonstrated by the accelerated trend in the consumer price index (CPI) for food. And as producer prices for farm products have dropped dramatically since June, food inflation continues to increase at a faster‐than‐normal rate.
Meanwhile, the big food companies are reporting “higher‐than‐expected earnings for the quarter that ended in September 2008, due in large part to higher prices for consumers.” Something stinks here.
Speaking to members of the media after a speech at the Cellulosic Ethanol Summit Wednesday, Secretary of Agriculture Schafer said the group that held a press conference yesterday calling for an end to ethanol subsidies “stood up there with no credibility whatsoever,” when they claimed that it will take 18-24 months for the lower commodity prices to bring food prices back down.
“I just think that they are totally off base,” Schafer said. “They are trying to justify the increased cost and increased profits that they’re making at the expense of another industry and that’s just not appropriate.”
Schafer is especially concerned that the group is working against important public policy for energy independence. “Why would be they be against energy independence?” he asked. “They’re working against economic activity. Why would they be against economic activity?”
“They’re trying to justify their corporate policy in increasing costs to the consumer by blaming it on somebody else – that’s just simply wrong.”
Now that gas prices are lower and corn prices are down, everyone wants to know why food prices are still higher than they were a year ago. But, the companies and organizations most responsible for the price of food went on the attack again today blaming ethanol, specifically corn ethanol, for the problem.
Calling ethanol the “30 year old still living in the parents’ house,” the “Food Before Fuel” group called for an end to all ethanol subsidies on what they called the 30th anniversary of government incentives to help development of the industry. The focus was totally on corn ethanol, without even a mention of moving into next generation fuels. The group took a few questions from the room, but the phone system must not have been working and no questions were taken from the phone.
Here’s what I wanted to ask National Turkey Federation president Joel Brandenberg, who was the main speaker on behalf of the organization: What if all the restaurants and grocery stores in the country were owned by the beef producers? How would the turkey industry compete? What incentive would they have to sell turkey? That is the situation the ethanol industry has been facing for the past 30 years (even though at least the first 20 shouldn’t count). How long do you think it would take to build up the turkey industry from scratch, teach people how to cook it, get farmers to breed and produce the birds, get processing plants in place, get federal regulations for turkey inspections, etc. You get the picture. This industry has been built literally from the ground up in less than 30 years.
And don’t get me started on the food price issue. They said it will take “18-24 months, assuming no future spike in corn price, to work through the damage that was done this summer,” said Brandenberg. Yet these were the same people who promised that if Texas were granted a waiver of the Renewable Fuels Standard that food prices would drop immediately.
The group claims that the general public agrees with them. Sure, if you tell them that the production of ethanol caused by government policies is driving up the cost of their food prices – of course they are going to agree with you. Problem is, that’s not true and the fact that they are saying the drop in corn prices will take TWO YEARS to work through the system while the increase in corn prices had an immediate affect on food prices proves that it’s not true.
Needless to say, the corn and ethanol industries immediately struck back after the press conference today. “These same ethanol critics are the ones who virtually promised to reduce food prices immediately, and have failed to do so, even though corn prices and energy prices are down by more than half in the last few weeks,” National Corn Growers Association president Bob Dickey said.
The newly-formed ethanol organization Growth Energy held a press conference after the food industry event, calling on them to “come clean about the misinformation that it has been spreading” noting that even though the Grocery Manufacturers Association was not out front in the media event, they are still the “ones that are funding most of the misinformation campaign that we are trying to work on.”
Growth Energy launched a countdown clock this week to track the hours and days elapsed since the group called on GMA and its members to lower prices for consumers at the grocery store in line with drop in the cost of corn and oil, which have decreased significantly. At a press conference last week, Growth Energy challenged GMA to either lower food prices or admit to the fundamentally flawed argument it has been making about biofuels.
I hope to see Congress have a hearing on this issue and pull in the food manufacturers like they pulled in the oil companies to at least rake them over the coals a bit for making big profits at the expense of the consumer and then blaming it on someone else. At least they aren’t lining up for a bail-out – yet.
Corn is selling under the cost of production, yet the price at the grocery store remains the same and food processors are continuing to blame ethanol producers for high food prices. Corn growers in Missouri are fighting back to get the truth out to consumers.
Missouri Corn Merchandising Council chairman Keith Witt of Warrenton says, “Judging by the record profits and smaller packaging, the motive of big food companies is crystal clear. Their focus is on their bottom line – at the expense of farmers and consumers.”
And that bottomline looks pretty good right now. This quarter alone, Kraft boasted a net income of $1.4 billion – more than double last year’s results. Sales at Kellogg’s climbed 9.5 percent and third-quarter net income increased from $305 million last year to $342 million this year.
“Consumers deserve the truth and America’s farmers deserve an apology,” Witt concluded.
To that end, Missouri Corn has launched a series of radio ads to help educate consumers on the “sticky pricing” in today’s food industry. The spots question how grain prices have dropped, yet food prices remain the same, therefore eliminating the blame ethanol has unfairly been given.
The Missouri Corn Merchandising Council (MCMC) is celebrating 25 years of developing market opportunities for corn growers in the state. 
The occasion was marked as part of the Missouri Corn Growers Association (MCGA) annual meeting Tuesday in Jefferson City. CEO Gary Marshall, who has led the organization for over 23 years, was pleased at the turnout for the event. “We had a number of legislators that came in, I think we had over 50 that were registered, and we had a lot of growers there as well, so it was a great time to celebrate 25 years,” Marshall said. 
MCGA honored 17 members of the Missouri state legislature with Friend of Corn Growers awards, including Representative Brian Munzlinger who served as chairman of the MCMC in 1993-94. That was the year that Missouri really took the lead in promoting ethanol by expanding use to over 16 percent of the state’s fuel, funding two feasibility studies for ethanol plants and introducing an E85 van at the Indianapolis 500. 
Missouri corn growers headed to the state capitol after the meeting to present their legislators with breakfast for the next couple of months – four boxes of corn flakes containing a total of 12 cents worth of corn. MCMC Chairman Keith Witt says the idea was to show them the disparity between the corn prices and products containing corn. “The box of corn flakes costs $2.18, so we’re just putting a little visual to that,” said Witt. “It costs more for the transportation of the box of corn flakes than the actual corn.”
Janet Atkison of KMZU Radio in Carrollton was one of several farm broadcasters who attended the event, which also included a live broadcast of AgriTalk. 
Among the projections for the next decade in corn, the report says “a gradual shift to corn away from other crops reflects the high levels of domestic corn-based ethanol production and gains in exports that keep corn demand and producer returns strong. Following a decline in 2008, corn acreage increases to 90 million acres by 2011 and remains at or above that level over the remainder of the projection period.”
The group representatives made claims that they were unable to back up with any specific facts when questioned and they offered no ideas for moving toward a renewable energy future, although they claim that is their ultimate goal. They simply want the production of corn ethanol halted because they question whether biofuels are capable of making a major contribution to reducing fossil fuel use.
An 
To hear the food companies tell it, the cause of rising food prices this year has been the high price of corn. The big food manufacturers have waged a yearlong, well-financed public relations campaign to blame ethanol for driving up the price of corn and grocery bills. It has been an effective message but it should be clear to everyone now that it simply isn’t true.
What’s wrong with this picture? The 
Earlier this year the whole focus was on commodity shortages – not enough wheat, smaller corn carryout. Now, all of the sudden, we are hearing that there are “big supplies” of wheat and corn.
Speaking to members of the media after a speech at the 
And don’t get me started on the food price issue. They said it will take “18-24 months, assuming no future spike in corn price, to work through the damage that was done this summer,” said Brandenberg. Yet these were the same people who promised that if Texas were granted a waiver of the Renewable Fuels Standard that food prices would drop immediately.
Missouri Corn Merchandising Council chairman Keith Witt of Warrenton says, “Judging by the record profits and smaller packaging, the motive of big food companies is crystal clear. Their focus is on their bottom line – at the expense of farmers and consumers.” 