'World News' Clues in on Doubling Corn Prices, Ignores Culprit
The price of food will continue to rise with the price of corn, according to ABCâs âWorld News with Charles Gibson.â But as far as the July 21 broadcast was concerned, everything except government-mandated ethanol was to blame for the higher grocery costs.
âWorld demand, bad weather and skyrocketing oil prices all contribute to the bottom line of your grocery bill,â ABC correspondent Sharyn Alfonsi said. âBut grocers say the price of corn is now the single biggest factor. Over the last year, the cost of a bushel doubled.â
ABC reported that the price of corn is up 119 percent over the past year to $7.50 per bushel, according to the U.S. Department of Agriculture (USDA).
âAnything that we eat that is either made from corn or that has been fed corn is going to increase dramatically in price over the next few years,â Scott Faber, vice president for federal affairs for the Grocery Manufacturers Association, told âWorld News.â
Alfonsi spelled out the predicted affect on specific grocery prices.
âYouâll see it in the dairy aisle,â Alfonsi said. âAlready, the USDA predicts things like milk and cheese will be up 8 percent this year and another 5 [percent] in 2009. Kelloggâs (NYSE:K) â who dishes out Corn Flakes, Sara Lee (NYSE:SLE) â who makes Jimmy Dean sausage, even Kraft Foods (NYSE:KFT) â the label behind Oreos and that famous blue box â say they plan to raise prices on some items by as much as 20 percent.â
But Alfonsi didnât address one of the primary reasons the price of corn has increased dramatically. She ignored the impact of the federal governmentâs 9 billion gallon corn-based Renewable Fuel Standard (RFS) mandate. In 2007, the law was expanded to require 36 billion gallons of biofuels be mixed into the nationâs gasoline supply by 2022.
According to former USDA chief economist Keith Collins, the current mandate will have a significant future effect if they are not eliminated.
âHow significantly? Collins said food costs could rise 23% to 35% above the normal annual inflation rate of 2.5% over the next two to three years if the RFS mandates are not reduced,â said David Goldman, CNNMoney.com staff writer, on June 27.
Thomas Elam, an agricultural economist at
Government ethanol mandates gained popularity at a time when some media pundits urged the implementation as a path to âenergy independence.â During that time, The New York Times columnist Thomas Friedman said cars powered by corn and ethanol would be âa great thing.â His comments were made on March 9, 2006 during ABCâs âGood Morning America.â
â[C]harlie, if they [Iran] cut off oil and oil went to $100 a barrel â that would make my day, because the sooner we go to $100 a barrel, the sooner weâre going to have everyone in America driving a plug-in hybrid car fueled by corn and ethanol,â Friedman said. âAnd I think that would be a great thing. And that would ultimately free us from having to worry about these people.â