NFU President Sets Record Straight on High Food Prices

NFU President Sets Record Straight on High Food Prices

WASHINGTON (April 28, 2008) – National Farmers Union President Tom Buis today said a request by Texas Governor Rick Perry for a waiver from the federal renewable fuels standard (RFS) mandate would create higher gas prices and have no impact on high grocery costs.

The demand for corn, to make ethanol, has been wrongly blamed for increasing food prices.

In a letter to Perry, Buis said off farm costs, including marketing, processing, wholesaling, distribution and retailing account for 80 cents of every food dollar spent in the United States, just 20 cents goes to the farmer. Furthermore, because farmers don’t set their own price, they are unable to pass on increased costs from high priced inputs like fuel and fertilizer.

U.S. Department of Agriculture (USDA) economists have cited a number of factors – increased demand for agricultural commodities, increased income in developing countries, rising petroleum costs, limited stocks and skyrocketing input costs – that have led to volatile commodity markets.

“It is no wonder that food costs are increasing when in the last seven years, gasoline prices have increased 198 percent, diesel fuel has increased almost 250 percent and crude oil has increased 453 percent,” Buis said.

NFU has urged the president to halt deposits to the Strategic Petroleum Reserve (SPR), which currently holds more than $80 billion worth of oil. “This action would result in a much more profound positive economic impact for consumers than waving the RFS,” Buis said.

Buis urged Perry to look into the billions of dollars in tax breaks given to oil companies, who at the same time are reporting record profits. “Instead of slashing ethanol use by 50 percent, maybe we impose an excessive profits tax on big oil and use those revenues to help consumers with their food bills; and livestock producers with higher feed costs as a result of oil prices,” he said.
Posted 4.29.08

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