High Corn Prices Driving Up Food Prices? Maybe Not.

With demand for corn as strong as its been in history, farmers today are enjoying a market-driven price for their commodity.  But, with corn prices higher than the have been in recent memory, critics are pointing the finger at the ethanol industry for being responsible.  One of their principle charges is that the increase in corn prices will drive consumer food costs through the roof.

Not so fast says a report by Advanced Economic Solutions, commissioned by the National Corn Growers Association.  According to the report, the impact on consumers in the grocery aisles would be negligible if the expected corn production this growing season lowers prices to more historic levels.  Should corn prices continue to stay north of $3.50 a bushel for an extended period of time, the result could be 3-5% increase in food prices for consumers. 

The report illustrates this point by noting corn in the $3.50-4.00 range would raise the price for cereal and bakery items - like corn flakes and corn chips - by 1% annually. 

The complete report is available on the NCGA website.