As a corn and soybean farmer, it gives me great pleasure to produce the most affordable and safest food supply on Earth. According to the USDA, Americans spent 9.9% of their income on food and beverages in 2005 – the lowest of any nation in world.
I can also say I provide fuel, as corn ethanol is a key component of our fuel supply. In 2006, ethanol plants produced 4.9 billion gallons of ethanol. That’s 4.9 billion gallons of gasoline displaced by ethanol.
The demand for corn that’s being driven by the emergence of the biofuels industry brings a badly needed lift to U.S. grain producers. Corn prices are expected to be $3.10/bu. this year, compared with historical prices that have languished around $2 for decades.
Media reports claim corn prices and the ethanol boom are causing U.S. food prices to skyrocket. Those reports are absurd.
A look at the Bureau of Labor Statistics retail food prices for March 2006 and March 2007 provides perspective. This March, the average gallon of milk was $3.07, nine cents less than March 2006. Two pounds of pork chops cost $6.28 in March 2007, 16 cents less than last year. Two pounds of chicken breasts are up eight cents, or less than 1.5 percent, from March 2006.
Think about this as you enjoy your morning cereal: A 14-ounce box of corn flakes costs $2.79 and contains approximately 10 ounces of milled corn. If corn is $3.50/bu., that box of corn flakes contains approximately 3.9 cents of corn. Most of us can find four pennies underneath the seat in our car.
On average, the cost of food inputs represents only 19 cents of each dollar spent on food. The rest goes toward marketing costs, including rising ones such as labor, packaging and transportation.
Market demand is telling farmers to grow more corn – and they’re listening. The past four years corn growers have produced the four largest crops on record, ranging from 10.75 billion bushels to 11.8 billion bushels. This year, growers intend to plant 90.5 million corn acres, the largest since 1944.
Given good weather, U.S. farmers will easily produce the largest crop on record and meet the needs of all markets: food, livestock and poultry feed, exports and ethanol.