Corn prices are the highest they've been in nearly ten years.
The demand for ethanol is driving the cost increase.
As Rebecca Williams reports, economists say it will mean higher prices at the supermarket.
(Sound of burger sizzling)
Everything in your classic American meal has one thing in common.
(Sound of soda can opening and fizzing)
The burger, chips, soda, even the ketchup. They all depend on corn.
Cows eat corn. Chips have corn oil in them. And your soda and ketchup have high fructose corn syrup as a main ingredient. Supermarkets are loaded with food that has something to do with corn.
And lately, corn's been near its highest price in ten years. The price has nearly doubled. Everyone from livestock producers to beverage companies has been feeling the squeeze of more expensive corn. And that's been starting to show up at the grocery store.
The US Department of Agriculture predicts our food is going to get more expensive this year, and maybe for many years to come.
Ephraim Leibtag is a USDA economist. He says we'll probably be paying between two and a half and three and a half percent more this year at the store:
"That's on average for your food bill. So if you're buying an average basket of products and you spend $100 when you go to the store, now you'll be spending $103. But you'll see it first in products most related to corn. In addition you'll see some after-effects because if more corn is produced that may drive up the price of other commodities if the tradeoff in land is between, let's say, corn and other potential farm products."
So if farmers plant more corn for ethanol instead of soybeans, that will drive up the price of soybeans, and in turn, the food that's made from them.
It turns out that's exactly what farmers are planning to do this year. A recent USDA report says farmers will be planting 12 million more acres of corn than last year... and less soybeans, and rice.
Leibtag says high corn prices have been great for corn farmers, but he says it's been rough on a lot of other people:
"If you use corn as a main ingredient you've already noticed your costs go up quite a bit. Some companies have explored the possibility of substituting or using other products. But certainly producers of livestock and poultry have higher feed costs. They have to think about exactly how they're going to produce their product when one of their inputs goes up 20, 30, 50, 80 percent in price."
Ethanol backers say it's just a matter of time before the market will adjust to more expensive corn. Bob Dinneen is the president of the Renewable Fuels Association:
"Corn prices are indeed going up... Our own industry is paying more for feedstock for ethanol today. But at the end of the day, as the marketplace adjusts, we'll be able to grow more than sufficient grain to satisfy the country's demand for food, fuel and fiber and rural America will be better for it."
But others argue it won't be possible to have it all forever. Lester Brown is the president of the Earth Policy Institute:
"Usually in the past, rises in food prices come when we have a poor harvest somewhere in the world as a result of weather and therefore is temporary. It usually lasts a year or so and weather comes back to normal and we get a good harvest again. What we're looking at now is continuous pressure on prices as far as we can comfortably see in the future, simply because in agricultural terms, the demand for automotive fuel is insatiable."
Brown says we're at risk of trading food for ethanol fuel. And he says it's not just going to impact food prices in the US. It's also going to affect food supplies worldwide, especially in developing countries.
"The biggest effects are hitting people in other countries who consume corn more directly, like Mexico for example, which has a corn-based diet and there the price of tortillas has gone up about 60 percent."
Brown says many US politicians have what he calls "ethanol euphoria." He's called for a moratorium on licensing new ethanol plants. He wants the government to think about whether it makes sense to keep subsidizing ethanol made from corn.
Many people, even some in the ethanol industry, say ethanol from corn is a limited solution. So researchers are looking for ways to make ethanol from other sources, such as woody plants like switchgrass.
In the meantime, ethanol from corn is still the most viable option. Economists say if corn gets diverted into ethanol on a large scale, that might mean we'll all be paying higher food prices for the next several years.
For the Environment Report, I'm Rebecca Williams.
