Does ethanol affect food prices?

http://dallasmorningviewsblog.dallasnews.com/archives/2008/07/does-ethanol-af.html

Depends on who you ask, considering the competing ag interests. And it looks like Texas A&M may have had trouble making up its mind on the issue as politics intervened. This is according to an interesting story by the Houston Chronicle.

The story referenced one study released by A&M this spring, which said the effect of corn going to ethanol has had minimal effect on retail prices. It said, in part:

A number of news stories have been written that cite recent increases in the farm level prices of corn, grain sorghum, wheat, soybeans, and rice as causing significant increases in retail food prices. ... It is clear that while some of the increase in retail food prices is due to farm level price increases, there are likely a number of causes ...

One element to rising food prices that tends to be overlooked is the impact of higher fuel prices (oil and natural gas) have on retail food prices.

The Chronicle suggested that A&M's position then evolved, as the governor raised his voice in opposition to federal ethanol production mandates:

Perry pressed for the waiver despite an April 10 Texas A&M study that showed a waiver of federal mandates on ethanol production would have little or no effect in driving down the price of feed corn for poultry and livestock. The A&M study blamed rising corn prices on the cost of oil, global demands for corn and commodities speculation.

At Perry's request, A&M did a second study that was released in June. It found that if corn crops were short because of Midwestern flooding, a waiver would significantly lower corn prices.

The U.S. Department of Agriculture earlier this week reported that the corn harvest would be smaller than last year but only because fewer acres were planted.

When the waiver request was filed, Perry's staff orchestrated a show of support from cattle raisers, pork producers and poultry interests.

Perry's staff coordinated preparation of the waiver request with Pilgrim's Pride lobbyist Gaylor Hughey of Tyler and Cliff Angelo with Public Strategies, the firm handling a public relations campaign against ethanol for Pilgrim's Pride and a coalition of meat producers.

Oh, yeah. The Chronicle asserted a link between the governor's position and a big contribution Bo Pilgrim made to the GOP governors' group.

Our editorial voice has given the governor a salute for his stand, saying:

Fortunately, Texas Gov. Rick Perry and Sen. Kay Bailey Hutchison are connecting the dots between Washington and the grocery and feed stores.

The dots, it seems, can be moving targets.

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