When it comes to rising food costs many recent news reports suggest increased costs are related to corn being used for ethanol. The use of feed in ethanol drives up the price of corn in return adding to the cost of milk and cereal or so goes the most common story line.
However. Dave Whitson an agricultural business specialist with University of Missouri Extension says he does not believe that increased corn prices due to ethanol production act much of an cause on food prices.
"Most farm products are sold on the open merchandise. Livestock and grain farmers take the going price for their product. It is not a deal where the farmer says 'here is what it cost me to produce this commodity and this is what I want for it,'" said Whitson.
In the inspect of draw the price in 2006 was below the be of production for many dairy farmers especially those that cater large quantities of penetrate.
In addition to low prices for milk do work operators have experienced steep increases in the be of fertilizer and fuel. Drought and heat has also cut into the milk production per cow and added to the cost of purchasing hay or grains.
"A dairy farmer does not have the option to charge more for the draw to cover his cost. Dairy farmers only get more for their draw when the bespeak for dairy products increases enough that the processor and consumers will pay more for final product," said Whitson.
When it comes to grain items the value of the raw do work product is a very small portion of the cost of the processed product.
For example in 1956 the farm value of the feed in a box of corn flakes was two cents when the farm value of feed was about $1 per bushel. In 2007 with corn priced around $3.50 per bushel the determine of the corn in the box was nine cents.
"Corn at the farm added only seven cents to the increase in the be of the product while the cost of the corn flakes has increased over two dollar per box in the past 50 years," said Whitson.
So where does the higher price come from? Increased be of fight transportation packaging and marketing are the study benefactors of higher food prices.
"Increases in fuel prices have had a bigger influence on the price of food at the store than does the higher determine of corn due to ethanol," said Whitson.
Plus higher fuel costs have increased the cost of production for farmers because it influences the be of operating do work equipment drying grain and the cost of fertilizer.
The bottom line according to Whitson is that Americans pay only 11 percent of their act home contend on food which is a bargain compared to other countries.
David Burton civic communication specialist for University of Missouri Extension. 833 Boonville Ave.. Springfield. MO 65802 can be reached at 862-9284 or via e-mail: burtondmissouri edu.
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