Posted By Cathryn August 29, 2013
With cotton prices falling, reports indicating larger profit margins for apparel manufacturers are surfacing. In the discussion, reporters do not seem to even ask if the companies that cover our rears will lower the price of a pair of jeans. The fact that they will keep the profits comes as a given.
So, why does the idea that falling corn prices will lower the price of food have so much traction?
In relating food prices to the use of corn for ethanol, consumers are expected to assume that food manufacturers would pass these savings along. Simply, why is different corporate behavior expected from the apparel industry than from the grocery? Given that both operate with the goal of turning a profit for shareholders, this makes little sense.
Common sense underlies the public understanding of the economics of cotton. It should underlie the public understanding of economics of corn.
Posted By Cathryn August 22, 2013
What do you call a woman who whines about high grocery prices but shops at Whole Foods while she does it? What if she is wearing high-end yoga apparel, a designer handbag and jewelry from the most exclusive collections while she does it? Out of touch? Worse?
Big Oil thinks that most Americans would call her my neighbor, share her values and understand her experience. Furthermore, they think we would take her offhanded analysis of the correlation between energy policy and consumer economics as reliable fact.
This time, it seems that Big Oil’s attack on corn ethanol exposed a real truth – that their priorities are seriously out-of-whack.
Click here to watch the ad. Pay careful attention to the “everyday mom” at the grocery store while you do so.
Now, allow for a moment of somewhat catty contemplation.
The receipt she holds up clearly has a Whole Foods logo at the top. With bags overflowing with groceries, she bemoans how much she has to pay and attributes rising prices to ethanol in her “impromptu” analysis.
Did you roll your eyes at some point and think “Whole Paycheck’s more like it?” Think that just maybe she isn’t doing her best to shop in an even moderately cost-conscious way? Just maybe?
Let’s go back to her outfit. Is that jacket Lululemon or Athleta? Either way, it certainly isn’t from Walmart or Target. The handbag stitching and perfect riveting show an attention to detail that comes more often from Nordstrom than a no name bag. The twisted gold necklace with its delicate work could be Yurman. It could be Hardy. One thing it isn’t is cheap.
Don’t even start to contemplate how she flits her hand about with a rock like that on it…
In reality, most women head to the market with less shiny hair tucked in a ball cap. They wear sweats not expertly coordinated to set off their coloring. They carry a bag big enough to tote around the million and one emergency items their kids might need. You find them at Krogers or Kmart.
What Big Oil got wrong in this ad is that they cast a reflection of themselves, instead of one real Americans identify with. The showed a well-heeled elitist who wants to keep enough in her very lovely pocketbook to maintain her luxe lifestyle. They showed, in essence, exactly why they campaign to keep a stranglehold on our energy market. Much like the woman in their ad, they don’t want to keep their own lavish lifestyles funded.
They want to do so at the expense of the American consumer. Someone they obviously do not understand and whose best interests they do not have at heart.
The farmers who grow ethanol want the best for American consumers because that is who they are too. In towns from Sioux Falls to South Bend, they are the farm families just down the road. Like you, they want to stop paying more than they should at the pump and in the store.
Find out more about how ethanol is fueling a movement toward consumer choice by clicking here.
Posted By Cathryn January 29, 2013
Newspapers, online sources and television reports alike have spent days now terrifying a hungry public with reports that party food favorite buffalo chicken wings will be in short supply this Super Bowl. Linking the supposed shortage to a variety of factors, from the drought to government biofuels policy, these reporters need to check their readily available facts.
Chicken wings will be abundant for the Sunday night football festivities in 2013. Actually, chicken wing supplies are currently 68 percent higher than at this time last year. All of the commotion is for naught.
Using data available to the public, and to the reporters who promote this bogus story, the above chart details the amount of chicken wings in cold storage over the past few years. This information, updated monthly by the U.S. Department of Agriculture, provides unbiased, factual data about our nation’s food situation. As it turns out, there will be wings enough for all.
So how does such blatantly false fodder gain national attention?
A group, interested in whipping up public panic and a loud uproar that could work to their own benefit, concocts a pace quickening story that ties directly into a major event. Media outlets, looking for a quick space filler that will attract attention without creating additional work for already strapped staffers, picks up said story. Then, the attention grabbing atrocity takes on a life of its own.
The age old strategy might have worked too. If only it weren’t for those pesky publicly available government reports.
So go ahead and invite a few extra friends over for the big game without fearing a fight will break out over the wings. America’s farmers have you covered.
Posted By Cathryn January 28, 2013
Big Food is running in circles to rehash old – and incorrect – claims about renewable fuel.
This time, it’s the National Chicken Council trying to scare football fans about the supply of chicken wings, and it’s déjà vu all over again: the industry repeatedly ignores the true drivers of food costs.
Despite the Chicken Council’s claims, the poultry industry hardly seems to be cutting back on feed and animal production.
Click here for the full post as it originally ran on the Fuels America blog.
Posted By Cathryn January 15, 2013
Corn farmers might be wise to take a cue from a certain sector of their counterparts in traditional business sectors and learn the value of expectations management.
In 2012, farmers felt the brunt of their own success as, after years of continually pushing the boundaries of how much they could grow using fewer resources, a massive drought hit the Corn Belt hard. Fields of young corn plants, the beginning of what many anticipated to be a record corn crop, withered in the relentlessly dry heat. Corn production powerhouses, including Illinois, Iowa and Indiana, found their crop would not meet initial projections.
For their inability to (literally) make it rain, these farmers faced massive cries from media outlets’ sensationalized stories. Ever vigilant in their quest for higher ratings, many journalists eschewed responsible research in favor of “commonsense” commentary, crying over and over that consumers would be shocked when they saw their grocery bills come fall.
From their self-claimed moral high ground, media mercenaries lobbed a frenzied attack. Will Americans starve to feed their cars? Should draconian rationing measures be instituted? Were the Mayans right?
With the USDA’s annual crop reports released, a clearer picture of the 2012 crop is forming. Corn farmers, who faced a serious adversary in Mother Nature, managed to grow 10.8 billion bushels of corn. No, the crop did not break all previous records, but it made the top ten lists.
Despite the worst drought since the Dust Bowl, farmers raised the eighth-largest corn crop since the United States started keeping records. Through better seed varieties, developed through biotechnology, improved practices and cutting-edge technology, our nation’s corn farmers fought back against Mother Nature’s assault.
They struck major blows at key times. Iowa took the front despite the drought, growing 1.87 billion bushels of corn. Minnesota and Nebraska stepped up production and buttressed the crop, growing 1.37 and 1.29 billion bushels respectively. Even Illinois, who saw their normally chart topping yields shrivel in the sun, made a major contribution to the nation’s overall totals, producing 1.28 billion bushels.
The lesson therein? Corn farmers fell victim to their own success in 2012. While striving to produce even more bounty year after year, their achievements became commonplace. Thus, when these over-achievers faced a natural disaster, their efforts were met with backlash instead of understanding support. When their fields suffer, farmers suffer. Yet, this fact was largely ignored.
The eighth-largest corn crop on record does not generate the sort of excitement that a record-breaking harvest may have. It does show the strength and reliability of U.S. farmers. Even in the face of a drought that would have decimated the crop only decades ago, they succeeded in providing a top ten crop. Expectations placed upon America’s farmers have obfuscated the triumphs of 2012.
Sadly, it is a story that deserves telling. Though neither glamorous nor sensational, U.S. corn farmers can provide a dependable abundance that Americans can count on for food, feed, fuel and fiber. Maybe this does not make a headline, but it does provide for a secure tomorrow. That’s an expectation farmers are proud to meet.
Posted By Cathryn November 21, 2012
Today’s post originally ran on the Fuels America blog. Fuels America, of which the National Corn Growers Association is a founding member, is a coalition of organizations committed to protecting America’s Renewable Fuel Standard and promoting the benefits of all types of renewable fuel already growing in America. Fuels America is founded on a simple core principle: Renewable fuel is good for the U.S. economy, for our nation’s energy security and for the environment.
Some special interests are claiming that renewable fuel is raising the cost of your Thanksgiving turkey. The fact is that turkey prices are lower this year than they were in October of last year. Renewable fuel does not dictate the price of a turkey and it does not dictate the price of your food.
Despite a decrease in the price of a turkey, food prices on the whole have gone up. But that is a result of rising oil prices, which have skyrocketed since 2005.
The oil sector, threatened by increasing fuel diversity, is trying to mislead consumers to turn back the clock on our progress in creating alternatives to oil.
Let’s take a closer look. Corn makes up 3 cents of every dollar spent on food at the grocery store. The rest comes from things like transportation, marketing, labor and packaging. Those Super Bowl commercials advertising for your favorite snack aren’t cheap. And paying for the petroleum to transport food inputs isn’t cheap either. Costs like those—costs that have nothing to do with the crops that go into your food—make up $.84 of each food dollar you spend at the market. As oil prices fluctuate, food prices follow because petroleum is a large input into food prices. Corn is not.
The EPA set out to discover the true impact of the Renewable Fuel Standard (RFS) on corn prices. And they found that the RFS has not had a significant impact on corn prices. In a study that included 500 scenarios, in nearly every case, EPA concluded that waiving the RFS for a year had no impact on corn prices.
Self-interested players are twisting the facts try to kill an industry that is creating American jobs, increasing our energy security and delivering alternatives to oil. Thanks to the EPA analyses, and a cornucopia of other data showing the reality that the RFS is working, we no longer need to eat the false choice between food and fuel.
For more information on Fuels America, click here.
Posted By Cathryn September 4, 2012
Drowned out by adamant cries rising from sides that oppose or support a waiver of the Renewable Fuel Standard, an important question has been, in a large part, ignored. Would waiving the RFS have the desired affect? With a single, simple action, can the EPA actually lower corn prices and improve the profitability of the livestock industry?
This weekend, the Kansas City Star examined this important question and found that the frenzied fracas may be for naught. Simply, waiving the RFS might not significantly impact the price of corn.
Citing a variety of factors, from gasoline manufacturers’ dependence upon ethanol to increase the octane of our fuel to local and state clean air regulations, the article clearly outlines how many parties see enough value in ethanol to continue producing and blending it even if the mandate should be waived. Ethanol provides society with more benefits than satisfying a government regulation; one might even conclude that the benefits originally motivated the creation of that regulation.
What does this mean in the context of the ongoing waiver debate? It means that both sides should see the situation as complex and multifaceted. Full consideration and careful examination can help avoid unintended consequences, which it is in everyone’s benefit to avoid.
It also further illustrates the many ways in which ethanol benefits Americans. From lowering prices at the pump to helping keep the air clean, blending ethanol into fuel does more than check a box on a list of rules to follow. It blends the benefits of a domestically produced, environmentally friendly fuel into our nation.
Posted By Cathryn August 30, 2012
In yet another gross simplification of a complex situation, a media uproar has given new life to the food versus fuel debate of 2008. A throwback to election years past, this perennial panic-producing paradox invades our homes yet again coaxing us to join the fracas. It seems simple. Choose how the nation’s corn crop should be used.
Everyone scream an answer at the top of your terror-stricken lungs right now. As if generating mass thirst could somehow alleviate the effects of a drought…
Truth be told, with the exception of bio-engineered drought-resistant seeds, little does. Oversimplifying the problem and marching forward with blinders on to obscure any unnecessary, albeit factual and relevant factors, will only land us in a forest of unintended consequences.
Simply, there is nothing simple about corn use. In a piece on National Public Radio this morning, Lon Johnson, a feed coop manager from Minnesota, drove the complexity of the situation on the ground home while many drove to work. Johnson, who deals with the intricate relationship between price, availability and ethanol daily, explained how a halt in ethanol production locally affects his business, producing feed for cattle, chickens and other livestock.
“It doesn’t make it any easier for us because maybe we can buy our corn 20 cents a bushel cheaper, but it costs me 20 bucks more because we bought corn distillers from the ethanol plant. That’s one of the things people a lot of times keep forgetting with an ethanol plant. Even though they’re using a lot of corn, they’re still putting a lot of feed back into the market. Food versus fuel? I think we need ‘em both.”
Does the complexity of the situation make it any less important for the farmers, ranchers and ethanol plant investors who are all suffering through this hot, dry summer? Of course not. Nor does it make it less relevant for a public looking for answers in uncertain times.
Looking at the detail, whether it be the reintroduction of corn to the livestock from the feed market or the role ethanol plays in lowering fuel costs, does allow assessment of the situation in a comprehensive, accurate manner.
Sometimes, the correct answer turns out to be “all of the above.” Instead of being pushed to pick an arbitrary side of an oversimplified argument, take a cue from Johnson. Answer C, “we need ‘em both.”
Posted By Cathryn June 28, 2012
As temperatures across the Midwest soar into the triple digits with little chance for rain or relief in sight, talking heads have started to blabber on again about how the drought will hit consumer’s wallets. Adding further pain to the heat-induced misery, these armchair economists stoke the fires of already burning financial concerns.
Yelling “fire” in a crowded theater may grab attention and cause alarm, but it is illegal to do so for a reason. Causing panic for the sake of causing panic does not have a public benefit.
A more cynical commentator might note that it does help drive rating and generate revenue. But instead of focusing on the fray, take a look at the facts.
According to a newly released study from National Public Radio’s Planet Money series, Americans today spend less on groceries than they did 30 years ago, nearly a full five percentage points less. Prices have declined across the board with some staple items, such as butter and chicken legs, down by 35 percent. Even a steak costs 30 percent less.
Will a drought impact America’s corn crop this year? Almost certainly. Does this spell dire circumstances that will leave the grocery consuming public taking out loans to feed their family with healthy, safe food? Almost certainly not.
In today’s America, what is truly in jeopardy is a sense of perspective. Banners flash before already stressed eyes on the evening news making dire declarations. Weary from battling real issues all day, these prophets of pain become an echoing chorus of doom drumming away basic sanity. Frantic feelings froth to a frenzy as the spiral of sustained stress with the prognosticators acting like an emotional succubus that feeds on America’s anxieties.
Stay calm. It may be hot outside, but cooler heads can prevail. Calmly, remember that America has the safest, most abundant, most affordable food supply in its history. The percentage of income needed to eat well has dropped to one of, if not the, lowest level in the developed world. Through innovation and hard work, farmers prove, time after time, that they can and will feed America, no matter what challenges they face.
Posted By Cathryn December 29, 2011
As Corn Commentary prepares for the New Year, our bloggers look back at some of their favorite posts about agriculture that appeared on other blogs throughout the year. In April, The Farmer’s Life ran “Corn Use, Food Prices and Ethanol,” which offered insight into the food versus fuel debate from a fresh perspective. This insightful piece, authored by a farmer from northwest Indiana, injects nuance and insight into the conversation.
Corn Use, Food Prices, and Ethanol
High commodity prices have reignited the food versus fuel debate. Not that it ever really went away, but with farmers reaping high prices for several months now you can see how it’s easy for those who don’t have the right information to make the connection that high commodity prices directly lead to high food prices. Makes sense right? If the price of ingredients goes up, then the price of food must go up too? Well, it’s not that simple.
Let’s talk about corn because it’s the one crop that is at the heart of this debate. If you follow any discussion about the price of corn it won’t take long before you find talk of the price of oil. Corn prices follow the same trends as oil, and at the same time corn will do the opposite of what the value of the American dollar is doing. Those are two of the biggest reasons corn prices are so high right now. Another problem is we’ve have a couple years of tough weather robbing some yield which puts in a situation today where we have tight carry over stocks of corn. The Middle East, source of much of the world’s oil supply, is going through some significant political shifts in many countries and it’s affecting the flow of oil out of those countries. At the same time the value of the dollar is dropping. Now that we have a very basic understanding of why commodity prices are soaring let’s get back to the food versus fuel deal. Proponents and opponents of ethanol often agree that 40% of US grown corn goes to ethanol production. I was at a marketing meeting a while back and the speaker put it another way. Four out of every ten rows of the corn we grow is taken to an ethanol plant. That statement allowed me to visualize that statistic in a very real way. Four out of every ten? That sounds like a lot!
OK, you probably think that sounds like a lot too, and I won’t argue with you, because I think it does too, at least on the surface. Critics of biofuels will often stop their argument right here. 40% of the crop going to ethanol, no wonder food prices are rising! Once again it’s not that easy. Ever heard of dried distiller’s grains or DDGs? This is the by-product of corn ethanol production. It’s a concentrated feed stock that is sold to the livestock industry. When you take into account the amount of DDGs going to livestock, therefore putting that corn back into the food market you bring that 40% of corn going to fuel down to 23%. So we’ve cut that usage number nearly in half, and we’re just talking about the United States. If we look at grain use on a global scale, only 3% of grain is going to ethanol production. And don’t forget, we export corn in this country, which means we’ve got product left over after we get what we want out of it to sell to countries all over the world.
The Renewable Fuels Association has written a post entitled Understanding the 2011 Planting Outlook, Ethanol and Food Pricing covering all these figures and how farmers are producing more on the same amount of total acres year after year. You can see in the RFA chart that planted acres haven’t changed in 15 years. As farmers continue to adopt new technologies in seed and equipment, and increase the use of more and more environmentally friendly practices like cover crops, they are going to keep getting more productive in the future.
So you don’t need to worry that you’re starving children in underdeveloped countries if you top off your tank with E15, E85, or biodiesel. It’s more likely those kids are starving due to regional economics and politics, not because American farmers are greedy.
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