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Farmers aren't to blame for increased food costs

Fri, May 9th, 2008
Posted in Commentary

In a world of finger pointing, farmers have had to shoulder the blame for the increased costs of food, when in reality, the facts point to other influences that contribute to the rising costs. I would like to share some statistics with you:

• The biofuels industry is reducing gas prices by 15% per gallon today. So, if the cost of gas is currently $3.39 per gallon, it would be up to $3.89 today without the use of biofuels;

• The average food item travels more than 1500 miles before reaching the final consumer;

• Gasoline prices have increased 198% per gallon; diesel has increased almost 250% per gallon; and crude oil has increased 453 percent, over the last 7 years;

• the United States has spent more than $130 billion subsidizing the oil industry over the past 32 years, which averages out to be almost $4.1 billion per year, and this does not account for the billions spent to protect our military interests in the Middle East;

• On the average, farmers receive only 20 cents of every dollar that consumers spend on food, the off-farm costs of marketing, processing, wholesaling, distribution and retailing account for 80 cents of every food dollar spent in the United States. For more information on the "farmer's share," go to www.nfu.org/issues/agriculture-programs/resources/farmers-share;

• a $1 increase in corn results in a 0.3% increase in the consumer price index for food whereas a $1 increase in gasoline results in a 0.6 % increase for food;

• increased production of corn-based biofuels is estimated to account for only 3% of the 43% increase in global food prices,

Exxon Mobile reported its 2007 profits were the highest ever recorded; earning more than $1,287 of profit for every second of 2007, for a total of $40.6 billion; and Oil is $120 per barrel.

President George Bush himself stated that ethanol has contributed to food costs, but that it was not the main reason for rising costs and that energy costs, which impact the costs of fertilizer and transportation, are major contributors.

The challenge of higher food prices needs to be addressed, and the multiple causes must be looked into, which include factoring in increasing energy prices, reduced global production, a weakened U.S. dollar, international trade policy, distorted commodity markets driven by speculators, and increased worldwide food demand.

The reality is that rising food prices impact all Americans, and a solution needs to be found.

Doug Peterson, of Madison, MN is president of the Minnesota Farmers Union.

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