Study proves corn not chief reason for food costs

July 20, 2007

In a recently completed analysis of food, energy and corn prices titled "The Relative Impact of Corn and Energy Prices in the Grocery Aisle," agricultural economist Dr. John Urbanchuk found that "rising energy prices had a more significant impact on food prices than did corn."

In fact, rising energy prices have twice the impact on the Consumer Price Index (CPI) for food than the price of corn, according to the report.

On a June 14 media conference call, Urbanchuk, Renewable Fuels Association (RFA) President Bob Dinneen and National Corn Growers Association President Ken McCauley discussed the topic and the study's results.

According to the study, "Increasing petroleum prices have about twice the impact on consumer food prices as equivalent increases in corn prices. A 33 percent increase in crude oil prices—the equivalent of $1 per gallon over current levels of retail gasoline prices—would increase retail food prices measured by the CPI for food by 0.6 percent to 0.9 percent. An equivalent increase in corn prices—about $1 per bushel over current levels—would increase consumer food prices only 0.3 percent."

A complete copy of the report is available at www.ethanolrfa.org.

Senate energy package promises better energy future
On June 21, the U.S. Senate passed the CLEAN (Creating Long-term Energy Alternatives) Energy Act by a vote of 65-27. Among its core provisions, the bill calls for the use of 36 billion gallons of renewable fuels use by 2022, 21 billion gallons of which must come from next-generation technology like cellulosic ethanol.

Responding to the Senate action, RFA President Bob Dinneen issued the following statement: "The U.S. Senate has taken yet another big step toward a more sustainable and stable energy future. By calling for greater use of domestically produced renewable fuels, the Senate is putting our nation's energy future where it belongs: in the hands of America's hard-working farmers, innovative researchers and courageous entrepreneurs.

"The RFA applauds those senators who have recognized the promise of ethanol and renewable fuels. These resources provide this country the opportunity to begin changing the course of our energy future for the better."

Ford turns over keys to new Escape E85 hybrid
The next generation of flexible fuel vehicles (FFV) was on display June 13 on Capitol Hill as Ford Motor Co. presented the RFA with a new Ford Escape Hybrid E85, the world's first flexible fuel hybrid vehicle, capable of operating on a mixture of gasoline with up to 85 percent ethanol.

One of only 20 Ford Escape Hybrid E85s, the innovative vehicle will be used by the RFA for real-world testing. According to Ford, today's Escape Hybrid E85 produces approximately 25 percent less carbon dioxide than a gasoline-fueled Escape Hybrid, the world's first and most fuel-efficient hybrid sport utility vehicle.

"Ford has introduced a vehicle that runs primarily on ethanol created by our nation's farmers, and then, with its hybrid power train, travels further on every gallon of that renewable fuel," RFA President Bob Dinneen said. "This is an important achievement in the drive towards sustainable, secure energy."

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