The Relationship Between
Corn and Retail Food Prices
Geoff Cooper
National Corn Growers Association
What is the Media Reporting?
“Consumers Eating Higher Food Costs” – USA Today, 9/6
“Ethanol and the Tortilla Tax” – New York Times, 9/6
“Corn should fuel people, not cars” – Virginia Daily Press, 9/9
“Ethanol blamed for rising price of food” – High Plains Journal, 8/24
“Poor suffer as ethanol causes food prices to climb”– Detroit News, 8/20
“Rising food prices squeeze consumers” – Miami Herald, 8/16
“Drunk on Ethanol” – Los Angeles Times, 8/16
“Ethanol will cost us at the pump AND the table” – Allentown (PA) Call, 8/15
How Much Have Prices Increased?
Consumer Price Index for Food
(% Change from Previous Year)
7.0%
6.0%
High End (4.5%)
5.0%
Low End (3.5%)
4.0%
3.0%
2.0%
1.0%
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
(P
2008 )
(P
2009 )
(P )
0.0%
Source: USDA-ERS
The Consumer Food Dollar
Farm Value
Includes value (farm price) of ALL ag commodities
(Meat, wheat, soybeans, corn, oats, barley, etc.)
Corn, Nearest
Wheat
Nearest Futures
Futures
Labor Costs
Key Labor Cost Indicators
Index (1992=100)
170
160
150
140
130
120
Compensation per Hour
Unit Labor Costs
1Q07
3Q06
1Q06
3Q05
1Q05
3Q04
1Q04
3Q03
1Q03
3Q02
1Q02
3Q01
1Q01
3Q00
110
1Q00
Index (1992=100)
180
Transportation, Energy, and Packaging
Key Energy Commodities
$3.50
$3.00
US $
$2.50
$2.00
$1.50
$1.00
$0.50
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Natural Gas ($/therm)
Unleaded Gasoline ($/gal.)
Diesel ($/gal.)
Energy & Transportation Costs
“While it may be more sensational to lay the blame for
rising food costs on corn prices, the facts don’t support
that conclusion. By a factor of two-to-one, energy is the
chief factor determining what American families pay at the
grocery store.”
– Economist John Urbanchuk, June 2007
“Claims on higher food prices in the popular press are
exaggerated…Energy prices and increasing retail
margins are competing explanations for the rising food
prices.”
-- FAPRI (ISU) Economist John Beghin, April 2007
Retail Food Items Contain Very Little Corn
Product
Qty.
Corn Req.
Value of corn
in unit @
$2.40/bu
Value of corn
in unit @
$3.25/bu
Beef
1 lb.
2.8 lbs.
$0.12
$0.16
Pork
1 lb.
3.6 lbs.
$0.15
$0.21
Milk
1 gal.
1.8 lbs.
$0.08
$0.10
Eggs
1 dz.
4.0 lbs.
$0.17
$0.23
Broiler Chicken
1 lb.
2.0 lbs.
$0.09
$0.12
12 oz.
10 oz.
$0.03
$0.04
Corn Flakes
Grocery Bill Comparison for Selected Items
ITEM
QTY
JUNE 05
PRICE
JUNE 06
PRICE
JUNE 07
PRICE
• Aggregate increase for
these items from June 06 to
June 07 is 5.5%...
Milk
1 gal.
$3.12
$3.00
$3.43
American Cheese
1 lb.
$3.83
$3.53
$3.63
Butter
½ lb.
$1.55
$1.45
$1.54
Ice cream
½ gal.
$3.62
$3.86
$3.88
Turkey
2 lbs.
$2.16
$2.26
$2.44
• However, June 07 prices
are only 3.4% higher than
June 05 prices
Chicken breast
2 lbs.
$6.60*
$6.56
$7.02
• 25-Year average annual
Eggs
1 dz.
$1.14
$1.24
$1.37
food inflation is 2.9%
Pork Chops
2 lbs.
$6.62
$6.28
$6.46
Bacon
2 lbs.
$6.92
$6.80
$7.32
Ground beef
1 lbs.
$2.74
$2.71
$2.86
Beef steak
2 lbs.
$10.54
$10.04
$10.62
Cola, non-diet
2 ltrs.
$1.13
$1.12
$1.18
Malt Beverage
72 ozs.
$4.91
$4.91
$4.99
$54.88
$53.76
$56.74
TOTAL
Source: BUREAU OF LABOR STATISTICS http://data.bls.gov/PDQ/outside.jsp?survey=ap
*2005 DATA FOR CHICKEN BREAST NOT AVAILABLE. VALUE IS 2006 AVERAGE PRICE
Thank You
Geoff Cooper
National Corn Growers Association
(636) 733-9004
[email protected]