Corn prices are down but grocery prices aren’t. Corn prices have “taken quite a dip,” Darrel McAlexander, who farms near Sidney in southwest Iowa, told Des Moines Register reporter Philip Brasher. “We haven’t seen the food prices back off that much.” So, Brasher asks, “What gives?”
Ethanol producers tell Brasher that the fact food prices have remained high proves the fuel had little or nothing to do with grocery costs. Economists say there were several reasons for higher food prices besides increased corn demands from ethanol production, including speculation in commodity markets, higher energy costs and troublesome weather. Most predict grocery prices will soon start coming down. Meanwhile, food producers (ConAgra, General Foods, Kraft and DelMonte) have all announced double-digit increases in sales.
One grocery chain (Wegman’s) has already announced price cuts. Farmers have already had their cuts, however. Corn peaked at almost $8 a bushel in June. It’s now down to about $4, about the price farmers need to get for them to plant enough corn to supply ethanol and food producers.