The Real Culprit Behind High Food Prices

Coyote Blog ^ | 8/16/12 | Coyote Blogger

[BfloGuy]

The Real Culprit Behind High Food Prices

August 15, 2012, 2:06 pm

Here is an amazing bit of data on where the US corn crop goes:

 

The Department of Agriculture says the corn crop in the US will be down 13% due to the drought.  But corn available for food uses is down 40% due to the ethanol mandate.  You do the math.  Wait, I don't trust your math.  I will do it for you:

PS-  It's kind of amazing the supposed worst drought ever has dropped corn yields by just 13%.  Hurray for modern agriculture.   This year we will still produce about the same amount of corn we did in 2006.

[BfloGuy]

When government makes our purchasing decisions for us, this is what we get.

[samtheman]

When we are not free, we have to do the bidding of our masters, even if that bidding makes no sense at all.

[BfloGuy]

Almost everyone admits the ethanol mandate is a mistake, but, funnily enough, no one acts to repeal it.

[count-your-change]

There is no shortage of corn for U.S. consumption. Each year the U.S. exports several hundred thousand tons of corn.

What this means is that when you buy a box of corn flakes you're competing with the Chinese as well as the ethanol producers.

Americans seem not to understand that they are paying for their Chinese Nikes and apple juice with their corn crop.

[Cloverfarm]

I don’t think the government has correctly figured how much corn will not be harvested as grain — many drought-stricken acres have been chopped for cattle feed.

Harvested acres might change later.

[jjotto]

Something like 94 million acres were planted in corn this year. Corn acres had been in constant decline before the ethanol fuel expansion, and likely would have been 70 million acres or less. Ethanol makers have drastically cut production and there’s no impediment to importing cheaper foreign ethanol.

Opposing an ethanol mandate is one thing, trashing people for trying to thrive by the rules our elected representatives established is quite another.

[Tallguy]

And the ethanol content of your gasoline is due to increase even further. Even more corn will be required to meet that requirement.

[taterjay]

Corn is currently about 14 cents per pound. 6 months ago it was 10 to 11 cents per pound. Corn flakes should only be 3 cents higher than 6 months ago for the amount of corn in the 1 pound box. The price of corn should have had no effect on beef as of yet and in fact beef should cheapen somewhat because of the drought and more animals going to market. Ethanol also produces a by-product feed for animal consumption, thus maintaining the feed supply for beef animals.

[RetiredTexasVet]

Everything coming out of the Dept. of Ag. regarding the drought is BS. They are spinning the drought effects at 13% to hide the fact that the reduction is more like 50%. If this were known, then the 40% of the crop mandated for ethanol production would appear as a folly of major proportions. They are hoping to spin it until after the Nov. elections .... then miraculously, the 4.5% inflation for food and other items will jump to 10-20%. I’m sure that the Dept. of AG has sent their people over to the Bureau of Lies and Statistics (BLS) at Labor to learn the fine art of lying with statistics.

[octex]

It’s kind of amazing the supposed worst drought ever has dropped corn yields by just 13%.
***************************
A week ago I heard on the radio that the farmers had planted 5 million more acres of corn and that was why the drought hasn’t hurt the yield as much as it would have otherwise.

I also hear numerous reports of the big price increases for corn at the groceries. ....A week ago, my local Wall-Mart was selling large ears in shucks at 4 for $1 (25 cents an ear and excellent sweet corn), while it was around 38 cents an ear only about 3 months ago at W-M and all other local groceries.

[trebb]

Almost everyone admits the ethanol mandate is a mistake, but, funnily enough, no one acts to repeal it.

That's because they are still circulating the lie that using ethanol saves the consumer $1/gal - despite the fact you can buy ethanol-free gas for 20 cents more and that price bump has to be to the comparative scarcity of pure gas at the pumps.

[jjotto]

The sweet corn (for human consumption) market is unrelated to the ‘field corn’ (mostly for animal consumption) market that gets the publicity.

[jjotto]

50% loss from the anticipated 13 billion bushels would be 6.5 billion bushels. Plenty of private crop trackers who don’t rely on the government don’t put the number even close to that low. We might have to survive on the same amount of corn we had in 2006!

The worst drought losses will NOT be in the heaviest traditional corn production areas; northern Iowa, northern Illinois and central Nebraska.

[LambSlave]

Opposing an ethanol mandate is one thing, trashing people for trying to thrive by the rules our elected representatives established is quite another.

I must disagree. Those who claim to value small government and capitalism, but disavow themselves of said principles for every illicit opportunity tossed to them as an incentive for re-election by their representatives are scum. Just because they claim, "But I'm just playing by the rules," doesn't change anything, it is why we are where we are today in terms of creeping socialism and encroaching big government. And yes, I feel the same way about all government subsidies and tax deductions designed to encourage immoral or irresponsible behavior. In this case it is both immoral and irresponislbe; immoral because it gives an unfair advantage to an industry that could not exist under ordinary market conditions, raising the cost of food for the masses at the expense of a few greedy farmers and processors. Irresponsible because of the effects on food prices and the damage done to our small engines, and other unintended consequences not thought through.

[jjotto]

Actually, I agree with your arguments exactly and apply them to Mitt Romney, where FReepers line up to “disavow themselves of said principles”.

Except you’ll have a tough time convincing anyone that tax deductions for business expenses are immoral.

[BfloGuy]

Opposing an ethanol mandate is one thing, trashing people for trying to thrive by the rules our elected representatives established is quite another.

Yes, it is. I haven't heard anyone trashing the farmers or the ethanol manufacturers. Have you?

[BfloGuy]

There is no shortage of corn for U.S. consumption. Each year the U.S. exports several hundred thousand tons of corn. What this means is that when you buy a box of corn flakes you're competing with the Chinese as well as the ethanol producers.

Americans seem not to understand that they are paying for their Chinese Nikes and apple juice with their corn crop.

Oh, so now even exports are bad?

Look. Some 40% of the corn crop goes to ethanol production. It makes a huge difference in the price of food -- exports to China notwithstanding.

[count-your-change]

Keep yer pants on there, guy. Who said anything about exports being good or bad?

I’ll share this simple truth with you: Imports have to be paid for with exports.

But idea of converting a large percentage of the corn crop to fuel is nutz to me as it forces the price of all food stuffs up and up.

[BfloGuy]

I’ll share this simple truth with you: Imports have to be paid for with exports.

That is a commonly-used phrase, but it's meaningless and just false as used.

I can buy a car from Korea and not sell a single thing to any other foreign country. So can 300 million other Americans. The trade balance is nothing but the sum of every American's purchases. Imports certainly do not have to paid for with exports in the sense of sales to foreign countries.

The United States does not trade with China -- Americans trade with Chinese countries. The meaning of the phrase has become corrupted.

Now, if I make my living, say, by cutting down trees and selling them as firewood, then I certainly must export my product -- but I export it to people outside my family. I then use the proceeds to "import" the other goods and services I need.

That is the only sensible meaning of the phrase.

[count-your-change]

As I said, “I’ll share this simple truth with you: Imports have to be paid for with exports.”

Your example proves the correctness of my comment. Thank you.