Report Demonstrates Corn Prices Do Not Affect Consumer Food Prices
October 27, 2014 - Issue #202View Full Issue
A recent study conducted by the Renewable Fuels Association (RFA) found that, “fluctuations in corn prices do not significantly affect consumer food prices,” and concludes that there is “no relationship between corn demand for ethanol and retail food prices.”
- Retail prices for other items (like chicken legs, frozen whole turkey, fresh whole chicken) have risen steadily and smoothly since 2007. Wide swings in corn prices did not interrupt or affect the gradual trend toward higher prices for these items. Retail prices for key dairy items like milk and cheese have been largely unresponsive to changes in corn prices. In fact, since January 2011, milk and cheese prices have been negatively correlated to corn prices, meaning retail milk and cheese prices have tended to move in the opposite direction of movements in corn prices.
- Retail prices for pork products have not shown any meaningful relationship to corn prices over the past seven years. It is well documented that the recent acceleration in pork and bacon prices has been driven by piglet casualties resulting from porcine epidemic diarrhea virus. These retail price increases have occurred at a time when corn prices have been plunging.
- Retail ground beef prices have steadily and smoothly trended higher over the past seven years, showing no obvious response to wide swings in corn prices.
“Now that we have established that there is no correlation between corn prices and retail food prices, what is the major catalyst for food price swings? Petroleum,” stated RFA President and CEO Bob Dinneen. “Nearly every step in the food-production process, including transportation from the farm to the grocery store, requires energy. Therefore, it isn’t a surprise that the United Nations Global Food Price Index and global crude oil prices are tightly linked. In fact, since 2000, the U.N. food index and world crude oil prices have had a near-perfect correlation (0.97 coefficient).”
For more on the report, please click here.