Rob Green’s recent Wall Street Journal op-ed “The cause of higher grocery bills isn’t the drought. It’s the failed federal ethanol policy” fails to take into consideration a host of factors, other than demand for corn, that affect food prices.
In the domestic and global markets commodity, labor, transportation, energy costs, processing, and marketing costs all contribute to what we pay for food in our local grocery store or restaurant. In some cases, factors such as higher oil prices affect one or more of these underlying costs producing higher domestic and world food prices.
While any rise in food prices is an adjustment, right now food prices are actually rising at a rate that is not out of the ordinary, unlike 2008 when there were spikes in some food prices worldwide. Despite those more significant food price increases, the World Bank found that biofuels production, domestically and internationally, only accounted for about four percent of the 2008 cost increase, while the rapid increase in oil prices at the same time actually accounted for a much larger portion of the spikes.