'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 ABCâ€™s â€śWorld News with Charles Gibson.â€ť But as far as the July 21 broadcast was concerned, everything except government-mandated ethanol was to blame for the higher grocery costs.
â€śWorld demand, bad weather and skyrocketing oil prices all contribute to the bottom line of your grocery bill,â€ť ABC correspondent Sharyn Alfonsi said. â€śBut grocers say the price of corn is now the single biggest factor. Over the last year, the cost of a bushel doubled.â€ť
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).
â€śAnything 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€ť Scott Faber, vice president for federal affairs for the Grocery Manufacturers Association, told â€śWorld News.â€ť
Alfonsi spelled out the predicted affect on specific grocery prices.
â€śYouâ€™ll see it in the dairy aisle,â€ť Alfonsi said. â€śAlready, the USDA predicts things like milk and cheese will be up 8 percent this year and another 5 [percent] in 2009. Kelloggâ€™s (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€ť
But Alfonsi didnâ€™t address one of the primary reasons the price of corn has increased dramatically. She ignored the impact of the federal governmentâ€™s 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 nationâ€™s 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.
â€śHow 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€ť 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 â€śenergy independence.â€ť During that time, The New York Times columnist Thomas Friedman said cars powered by corn and ethanol would be â€śa great thing.â€ť His comments were made on March 9, 2006 during ABCâ€™s â€śGood Morning America.â€ť
â€ś[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 weâ€™re going to have everyone in America driving a plug-in hybrid car fueled by corn and ethanol,â€ť Friedman said. â€śAnd I think that would be a great thing. And that would ultimately free us from having to worry about these people.â€ť