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Letter to the editor in today's Wall Street Journal

There Is More to Higher Food Prices Than Corn Ethanol

When it comes to higher food prices, analysis frequently oversimplifies the contribution made by renewable fuels ("A Mandate to Raise Food Prices" by Rob Green, op-ed, Nov. 28). For most of the last 40 years, marketing costs for U.S.-produced crops have increased at a faster rate than the prices farmers receive for those products. In other words, the ingredients have been far cheaper than the cost of delivering them to America's dinner tables, whether at home or a restaurant. The farm share of the food dollar in 2008 was just 11.6 cents.

The rest of the food dollar involves all post-farm activities including processing, energy, packaging, transport, trade, servicing, advertising, labor and anything else required in the food-supply chain. Energy and transportation costs together accounted for 10.3 cents in 2008—almost as much as the farm share itself. Since November 2008, the U.S. has seen oil prices rise 61% and retail gasoline prices by 82%. Increasing energy costs are certainly part of the story, resulting in higher food prices.

Regulations also boost the cost of producing food and can lead to unintended consequences. One has to look no further than the European Union egg shortage for an example. A similar EU-style mandate was approved by California voters in 2008. If this were to become a national standard here, UC Davis predicts U.S. consumers could expect egg prices to rise at least 25%.

Our food system is multifaceted. Assigning blame to one ingredient in this complex recipe is a disservice to America's farmers and disingenuous to America's consumers.

Bob Stallman


American Farm Bureau Federation

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