05/22/08 Still Not Getting It

Still Not Getting It. I'm Greg Martin with today's Line On Agriculture. I really enjoy my job as an ag reporter but in recent days I have been waylaid by a number of people almost accusing me of being part of the rising costs problem and I find myself in a position of having to justify and defend agriculture. Think what ag producers have to go through! So let me state a few things again. Now, these are not my words. SCHAFER: While bio-energy generation does have some effect on prices, it is not a major effect. It is not even a big effect. And I think what is important here is we need to focus on what can be done, what can cause some relief and we can't overlook the energy side of the equation. That's USDA Ag Secretary Ed Schafer talking about the accusations that ethanol is the cause of high food prices. Bob Stallman, President of the American Farm Bureau Federation. STALLMAN: Farm Bureau analysis into the cost of food production and marketing shows that the cost of petroleum based energy is clearly the number one factor driving domestic food prices. 44% is due to the cost of energy. This means energy sources such as natural gas, oil and gasoline. This does not mean renewable energy like ethanol. But ethanol is not the culprit that American consumers are being led to believe. Biofuels are just a small factor in the many forces at play. And in the last couple of days a new revelation has come to light. Confidential documents were obtained that showed the Grocery Manufacturers Association and The Glover Park Group, a public relations firm, were financing a smear campaign blaming ethanol for rising food prices. National Corn Growers Association Ethanol Committee Chairman Steve Ruh talks about a recent study that was released by Texas A&M University showing what the true reason is for rising costs. RUH: What they really found was that actually it's the high energy costs related to oil rising which is the underlying factor in all these issues and especially when you look at what it costs to transport these products and to package them, you know it's all based on basically the cost of petroleum. With crude oil prices jumping above $130 dollars a barrel and the average price of a gallon of gas closing on $4, it is easy to see where transportation costs must play a crucial factor in this game of cat & mouse. There is also a major factor of worldwide droughts that have had major impacts on food yields. Where will this end? I wish I had that answer but it will come to boiling point sooner than later. Yes, ethanol has increased food prices, but only fractionally while other factors account for the major increases. That's today's Line On Agriculture. I'm Greg Martin on the Northwest Ag Information Network.