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High food costs: Are farmers to blame?
Area growers say weak dollar is behind increases
by Clinton Thomas
Thursday, May 29, 2008

Fresh off one of the most bountiful harvests in history, American farmers are stuck on the defensive.

High grain prices brought a welcome piece of good news to rural America with last fall’s harvest. But soon after, those prices dragged farmers and the ethanol industry into the headlines as possible scapegoats for rising grocery bills.

Assigning blame proves a tricky situation for the average consumer who lacks knowledge in farm economics. Unlike most forms of business where a seller sets a price for his product, the farm economy forces producers to sell at a fixed market price set by outside sources. In basic terms, farmers must sell or wait for a better price. They’re price takers, not price makers.

“It’s no more our fault now than when prices were low. We don’t set the prices,” Blake Hurst said.

Mr. Hurst has farmed in Atchison County for more than 30 years and serves as Missouri Farm Bureau vice president. He said situations like this have come up maybe four or five times since he started farming.

“You fight it year after year, and then you get a big one,” Mr. Hurst said. “We’ll be drowning in corn 18 months from now. We always do.”

A handful of good years spread throughout a farmer’s career help pay for all the years of bad prices and bad weather. In the profitable years, farmers attract blame for high food prices. When prices go down, critics scold the government for keeping producers afloat with subsidies.

Steve Alexander, who farms near the Iowa border around Hopkins, Mo., said that as people become further removed from their agricultural roots, they are less likely to understand farm issues.

“I see it in our own family,” he said. “I’ve heard the comment ‘I don’t feel sorry for the farmers, look at all the money they’re making.’ They don’t know what the input costs are like.”

Both Mr. Alexander and Mr. Hurst agreed that the weak dollar was the primary factor driving high food prices. Even so, the ethanol industry draws most of the blame.

Leaders from five prominent agricultural groups and the Renewable Fuels Association came together Wednesday to defend the ethanol industry.

Ron Litterer, president of the National Corn Growers Association, expressed frustration over a recent news story where AMC Theaters blamed ethanol for rising popcorn costs, then used expensive popcorn as a justification for raising its ticket prices. Ethanol is made from yellow field corn, while popcorn is made from popcorn, he said. Mr. Litterer then pointed out that popcorn remains cheaper than the movie company indicated.

“The farm price of a tub of popped corn is less than the cost of the paper tubs they scoop it into,” Mr. Litterer said.

Bob Dinneen, president of the Renewable Fuels Association, said that the link between oil prices and grain prices has more impact on grocery bills than ethanol, which reduces demand for oil and helps pull prices down.

Oil prices affect nearly every aspect of farming, from the fuel in the tractors to producing the fertilizer for the fields. When oil prices rise, so does grain.

“You can’t grow $2.50 corn on $4.50 diesel,” Mr. Dinneen said.

Clinton Thomas can be reached

at clintonthomas@npgco.com.

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