Grocery Manufacturers Assoc. Releases Statement Regarding Skyrocketing Food Costs

The GMA issued a statement today regarding the record $6.00 per bushel cost of corn in the US. The price increase was a direct result of statements issued earlier this week by the US Dept. of Agriculture indicating corn production will dramatically reduce

The Grocery Manufacturers Association (GMA) which represents the world's leading food, beverage and consumer products companies issued a statement today on the heels of the statements made earlier this week by the US Department of Agriculture. In the USDA release, the public was informed that while the demand for corn is high, farmers will dramatically reduce their production in the coming year. Grocery Manufacturers Association Vice President for Federal Affairs Scott Faber made the following remarks regarding the skyrocketing prices of foods nation and world wide.

"The Federal Government's food to fuel mandates are diverting 1/4 of America's corn supply from kitchen tables to fuel tanks, and the result is corn selling for $6 a bushel, an all time high. And the ripple effects are being felt throughout the economy. In tough times like these, when many families are struggling, Congress and the Administration need to take a hard look at the unintended consequences of these food to fuel mandates that raise food prices without offering a significant environmental benefit."

He went on to state that "From milk, to meat, to bread, the overall cost of food is rising twice as fast as the rate of inflation." The $2.1 trillion food, beverage and consumer packaged goods industry employs 14 million workers, and contributes over $1 trillion in added value to the nation's economy. With a few exceptions, nearly every grocery category measured by the Labor Department, which compiles the official inflation numbers, has increased in the last year. Milk is up 17 percent, as are dried beans, peas and lentils. Cheese is up 15 percent, rice and pasta 13 percent, and bread 12 percent. No food product has gone up as much as eggs, jumping 25 percent since February 2007 and 62 percent in the last two years. It is predicted that cereal and baking products will continue to increase because of steep prices for wheat. The price of cereal and bakery products increased 1.8 percent in February, the largest monthly gain since January 1975. Economists say higher food costs are being caused by rising energy prices, a weak dollar that encourages exports of American crops and food products, and soaring prices for farm commodities like milk, corn and wheat. This combined with the government incentives to use our food sources as fuel is leaving many reeling at the grocery store checkout counter. At a store in Bloomfield, New Jersey shoppers complained about the growing price of food.

“I’ve spent $300 in a matter of two weeks,” Roseann Fede said. “It used to be like $150. Milk, eggs, nonperishable things, everything has gone up in price.”

Jomarie and Rafaelito Ortiz emerged from Stop & Shop with a cart stuffed full of bags, mostly to feed their four teenage boys. Asked whether they have noticed a difference in their grocery bills, Ms. Ortiz said, “Are you kidding me?”

“Our food bills are $600, $700,” she said, explaining that they were closer to $400 a year or two ago. “The cereal was astronomical.”

Her husband agreed and suggested that they might be better off buying a few cows of their own. “The way food prices are going,” he said, “I’m going to buy a ranch.”

In June of last year The American Coalition for Ethanol issued a press release in an effort to stem reports that the push to use corn as fuel was instead fueling the rising cost of food. In the release they stated the following:

While corn is an ingredient in only some grocery items – mainly livestock, dairy, and poultry – all grocery items are dependent upon energy for production, processing, packaging, and shipping. These non-farm costs make up the majority of the real cost of food; according to the USDA, 81 cents of every food-cost dollar pays for expenses such as labor, packaging, advertising, transportation, and energy costs. “If corn prices due to ethanol demand do indeed add a couple of cents per day to Americans’ food bills, this is a great value for creating thousands of new American jobs, breathing cleaner air, saving billions in farm program costs, and lessening our dependence upon expensive imported oil and gasoline,”

From what consumers are currently experiencing, I think the estimate of a "couple of cents per day to Americans' food bills" is a mighty far cry from reality.