Are Corn Prices Really at a Record Level?

Iowa farmer who is a "Kernels of Truth" spokesman says: "Consumers deserve the facts!"

In the food and fuel debate, ethanol and corn critics "should at least get the facts straight," says Julius Schaaf, chair of the Iowa Corn Promotion Board . Schaaf specifically refuted recent claims about so-called "record" corn prices.

"It doesn't help consumers who are already concerned about food costs when they get hit with misinformation disguised as 'facts,'" says Schaaf, who farms in Fremont County. "At a minimum, corn farmers and consumers should demand honest data."

Despite claims that $6 corn is at the highest price ever, the real price of corn has been higher at several points during Schaaf's 30 years of farming. "If you're going to compare corn prices today with past years, you've got to allow for inflation," he explains. "For example, in mid-1984, corn at the farm gate sold for $3.05 in Iowa – but it would take $6.27 in today's dollars to equal that. In 1981, Iowa corn sold as high as $3.21 per bushel, which would be $7.98 today."

Much of crop already sold for lower prices

He notes, too, that much of the 2007 corn crop has already sold for prices well below the $6 range. For the first three months of the 2007/08 marketing year, the average price farmers received was $3.34 per bushel, and the average price for the year is projected at $3.75 to $4.25, according to USDA's Economic Research Service.

While corn prices are a real concern for livestock producers and processors who buy it in huge quantities, the effect of the price of corn on consumer food prices is relatively small. The greater impact on food prices comes from the increased cost of labor, transportation and energy, according to USDA economists. Booming world demand for commodities is also part of the supply-demand equation that is pushing up prices today.

"We want consumers to have the truth about corn, not some claim that amounts to comparing apples and oranges," says Schaaf. "Price data is available to anybody via the Internet, and there's also a handy inflation calculator for comparing prices from one year to the next. There's no excuse for peddling misinformation."

"Kernels of Truth" campaign provides facts

The Iowa Corn Growers Association and the Iowa Corn Promotion Board began their information campaign earlier this year aimed at providing "Kernels of Truth" about the role of corn ingredients in the nation's food supply. "People want the truth about issues like food prices and where price increases come from," notes Doug Holiday, a farmer from Adair County and an ICGA director.

Holiday says there have been too many false claims being circulated recently about corn and its role in food prices. "Kernels of Truth is our effort to make sure consumers have the fact about food and fuel," he says. "Most people don't realize when they spend a dollar on food, only 19 cents goes to all the farmers involved in producing the food. That's not just corn farmers. It's the cattlemen and pork producers, the families that dairy, the fruit and vegetable growers in other states. The rest of that dollar pays for processing, advertising, transportation and packaging."

For more information about the "Kernels of Truth" campaign, contact Iowa Corn at 515-225-9242 or visit www.iowacorn.org.

TAGS: USDA
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