To follow up my food-for-fuel madness post, there is some disturbing (but not surprising) news re: the price of corn. According to a government report released Monday, 8 percent fewer acres of corn will be planted this year by U.S. farmers, while soybean and wheat acreage will increase by 18 percent and 6 percent, respectively.
More on this from the WSJ (subscription required):
Terry Roggensack, principal at The Hightower Report, a Chicago-based commodities forecast service, said U.S. corn supplies will be “extremely tight.” Stocks of corn just before the new harvest could fall to a decades-long low of 636 million bushels, compared with 1.4 billion bushels currently. If corn usage remains unchanged and if yields are the same as last year, he says, “we’ll run out of corn.”
Scott Faber at the Washington-based Grocery Manufacturers Association, says, “Clearly, Congress needs to revisit the food-to-fuel mandates in light of today’s crop report.” Mr. Faber says his organization expects food inflation to be more than 8% this year. Last year, food inflation was around 4%.
From the NYT:
Corn prices shot higher on the planting report, going over $6 a bushel for the first time. Joe Victor, an analyst with the market research firm Allendale, said he expected corn to rise as high as $7.50 by the summer.
And from the LA Times:
With corn prices already pushing up food prices, a spokesman for the Grocery Manufacturers Assn. called the projection ‘alarming’ and warned that the estimate bodes ill for consumers at the supermarket. “Food prices are rising twice as fast as inflation, placing significant pressure on American families who are already suffering from economic uncertainty,” spokesman Scott Faber said.
The decline in the amount of farmland that will be devoted to growing corn this year will worsen the effect of “food-to-fuel mandates which are resulting in massive increases in food prices,” Faber said.
Grocery prices are rising at more than a 5% rate this year, the fastest increase since 1990, according to the Department of Labor.
Food producers are worried about the decline because corn is a building block for a wide range of foods. It is feed for dairy cows and egg-laying hens. It fattens cattle, hogs and chickens. Corn syrup is the third-largest ingredient in Heinz ketchup and is the sweetener that goes into soda pop and hundreds of other food items.”
Sorry, shoppers. Don’t forget to thank all the politicians and activists who have jumped on the food-for-fuel bandwagon, your household budgets be damned.