Rising Corn Prices and Your Grocery Bill.(Yet our govt keeps subsidizing at high cost)

smart money ^ | 7/18/12 | j hough

[bestintxas]

Corn prices are nearing the record highs of last summer as the U.S. Midwest suffers its worst drought since 1956. Shoppers should expect higher grocery bills, because corn is used in three-quarters of supermarket products.

But don’t panic. Overall cost hikes are likely to be modest.

“A 50% increase in the price of corn tends to raise total shopping bills by about 1%,” says Ricky Volpe, a research economist with the U.S. Department of Agriculture. Corn’s price has jumped 45% this summer. Of course, even a modest increase to shopping bills is unwelcome news for households on tight budgets.

Strange as it may seem, farm crops aren’t nearly the largest component of food prices. In 2008, just 15.8 cents of each dollar shoppers spent on food went to farms, according to the USDA. The rest paid for labor, packaging, transportation, advertising and more.

Broken down by industry, food processors, which turn crops into things like cereals, sweets and oils, capture nearly twice as much of consumers’ food spending as farmers, and foodservice companies, more than three times as much.

[bestintxas]

The ironic thing is we don't even need the ethanol being produced.

Have always thought it stupid to burn our food to drive a car.

Before the ethanol supporters jump and say it is not the type of corn used for food, I will respond by saying the land used to grow it CAN be used to grow food corn or some other staple. We are not doing it as these corn growers are getting massive subsidies to keep in the ethanol business and ADM keeps making profits at taxpayer expense.

[P.O.E.]

http://www.ag.ndsu.edu/news/columns/dairy-focus/dairy-focus-consider-pros-and-cons-of-alternatives-to-corn/

“This past year, about 20 percent of the nation’s corn crop was used to produce 4.8 billion gallons of ethanol. The percentage of corn that will be used for fuel production could increase even more because federal legislation has mandated that ethanol use reach 7.5 billion gallons by 2012.

But do these statistics doom dairy producers to a life of high corn prices? Or will other factors stabilize the price of corn, as they have in the past?

In the short term, corn prices are expected to remain in excess of $3 per bushel. In the long term, economists predict the price of corn will drop to more normal levels of around $2.50 per bushel as acreage and yield increase and other sources of carbon for ethanol production are found. Also, alternative fuels, such as hydrogen, methane, wind, solar and nuclear, may reduce the demand for ethanol.

Once all projected ethanol plants in North Dakota are on line, they will provide approximately 489 million gallons of ethanol in one year. Based on the 2006 harvest of 163.8 million bushels of corn, full plant capacity would require more than 106 percent of our current corn production. The shift in acreage to meet this demand has current markets speculating on future availability and price. While the upsurge in corn and other grain prices is an optimistic situation for growers, livestock producers who use corn, especially dairy farmers, are faced with some major out-of-pocket expenses.”

[PapaBear3625]

We should also get rid of sugar subsidies, so that businesses have an incentive to switch away from high fructose corn syrup as a sweetener.

[combat_boots]

If grain or corn syrup is used somehow in anything you buy, stock up.

[pallis]

Stop burning our food supply in our gas tanks. It is stupid, and expensive. It has already caused food shortages around the world. We prefer better gas and cheaper food.

[Deagle]

Trouble is that it is not just corn! We are experiencing a great increase in food process (of course the government sees no inflation at all or at least minimal).

I’m here to tell you that food prices have skyrocketed and is not about a 12% increase overall from the last year!

Inflation, only those that have to buy food will notice! Ha.

[bandleader]

You are EXACTLY RIGHT!That land could be used for FOOD!!Ethanol has water in it.When is the last time you were advised to put WATER in your fuel?????????????????????????????

[Free Vulcan]

Horse****. I see the liberals have invaded the forum agan.

Farmers get zero subsidies to grow corn for ethanol. The blender credit for ethanol is expired and not renewed. The part of the corn used for ethanol is the same that goes into soda pop, which is not food, and the rest is fed for livestock and human consumption.

Corn has been grown on the same land for 50 years, long before the first ethanol plant was built in the 80’s. If the market allowed growing food corn for profit on that land it would have been done years ago.

Facts are tough things.

[free me]

It’s true that the blender subsidy and tariff are gone as of Jan 2012.

However one form of welfare to corn growers, the “Renewable Fuel Mandate”. that forces us to use the crap in our cars, is still there.

Hopefully we can put an end to that soon and get the corn growers off the government tit.

[sand88]

Farmers get zero subsidies to grow corn for ethanol.

what an outright lie. You can't write that with a straight face.

Do a simple web search and you will numerous results that show "explicitly" that farmers get subsidies for growing corn for ethanol.

The entire ethanol program is an evil enterprise. If we had a true free market ethanol would never have been developed. It is solely a product of government intervention.

Horse****. I see the liberals have invaded the forum agan.

Liberals? huh? Are you a farmer? Only a liberal would support ethanol or farm subsidies.

[RicocheT]

Ethanol was a way to boost the corn price and get the farmer vote. With the drought and rising food commodity demand from abroad, the boost from ethanol is no longer so necessary. Maybe a year or two holiday in ethanol blending is in order.

[SunkenCiv]

Wrong again.

Drought could go through October: forecasters
wtaq.com | July 19, 2012 | Deborah Zabarenko
Posted on 07/19/2012 2:58:08 PM PDT by Stalwart
http://www.freerepublic.com/focus/chat/2908332/posts

[nascarnation]

I think you’re a bit behind the curve.

Here in Indiana, ethanol plants are closing down faster than K-marts in the 1990s.

[SunkenCiv]

OPEC Has Already Turned to the Euro
GoldMoney Alert
February 18, 2004

...The source for the euro exchange rate is the Federal Reserve, and I have calculated the euro's average exchange rate to the dollar for each year based on daily data.

US Imports of Crude oil
(1)	(2)	(3)	(4)	(5)	(6)
Year	Quantity (thousands of barrels)	Value (thousands of US dollars)	Unit price (US dollars)	Average daily US$ per € exchange rate	Unit price (euros)
2001	3,471,066	74,292,894	21.40	0.8952	23.91
2002	3,418,021	77,283,329	22.61	0.9454	23.92
2003	3,673,596	99,094,675	26.97	1.1321	23.82

We can see from column (4) in the above table that in 2001, each barrel of imported crude oil cost $21.40 on average for that year. But by 2003 the average price of a barrel of crude oil had risen 26.0% to $26.97 per barrel. However, the important point is shown in column (6). Note that the price of crude oil in terms of euros is essentially unchanged throughout this 3-year period.

As the dollar has fallen, the dollar price of crude oil has risen. But the euro price of crude oil remains essentially unchanged throughout this 3-year period. It does not seem logical that this result is pure coincidence. It is more likely the result of purposeful design, namely, that OPEC is mindful of the dollar's decline and increases the dollar price of its crude oil by an amount that offsets the loss in purchasing power OPEC's members would otherwise incur. In short, OPEC is protecting its purchasing power as the dollar declines.

[SunkenCiv]

It's the Obamacare, stupid! One-half gallon of oil in the form of pesticides per bushel of corn would cost $2 to $3 per bushel. If this were true -- and it clearly isn't -- it should be enough to illustrate to literally anyone that the price of petroleum is quite literally the ONLY thing driving corn prices. And this idiotic piece of agitprop -- from a hydrogen "energy" advocacy site -- also shows the guy in the encounter suit spraying chemical fertilizer, a sight that I've never been privileged to see, what with me *growing up on a farm*. The Bum Rap on Biofuels [2008] Campaign to vilify ethanol revealed [2008] Oil Price Pressure Driving Global Switch to Biofuels [2006]

[Free Vulcan]

Exactly what subsidies do farmers get for growing corn for ethanol? Please, name them.

[bestintxas]

“Exactly what subsidies do farmers get for growing corn for ethanol? Please, name them.”

Perhaps you should read the Washington Times today.

GHEI: Crop cronyism
Trillion-dollar farm bill is the latest example of what’s wrong with our economy

http://www.washingtontimes.com/news/2012/jul/19/crop-cronyism/

[Rides_A_Red_Horse]

Stop burning our food supply in our gas tanks. It is stupid, and expensive.

---

And it destroys your seals!

[pallis]

What I’ve done with my chainsaws and boat to counter the bad effects of ethanol is use the marine stabil. I’ve heard that ethanol is hard on aluminum tanks, and my boat has a new 170 gallon aluminum tank that I don’t want alcohol corroding. Life would be simpler and cheaper if the enviro terrorists would go away, and leave people alone.