Nebraska

Nebraska corn producers have seen the value of their corn drop dramatically over the past month, and that begs the question as to whether consumers will see a corresponding drop in their grocery bill, since grocery manufacturers have argued that higher corn was behind their rising prices.

Since the highs in the corn market were traded in late June, corn futures have dropped by about $2 per bushel cutting about 25 percent off its value.

"The Grocery Manufacturers Association and its members were quick to blame corn prices to justify their price increases, but will they lower their prices now that corn prices have fallen? We believe the answer is no, they won't lower prices a penny," said Don Hutchens, executive director of the Nebraska Corn Board. "The reason is what we've said all along, that the main driver in higher food prices is high oil prices."

The average food product travels 1,500 miles to get to the store shelf. A semi can haul 4,200 boxes of corn flakes at a time, and with 10 ounces of corn in each box, that's a total of 46.9 bushels of corn. At a $6 corn price, the corn in all 4,200 boxes has a value of $281.40. To haul those boxes 1,500 miles, however, would cost $881.25 with diesel priced at $4.70 per gallon.

"That means it takes 21 cents of diesel per box to get it to the store, yet the value of corn in that box is less than 7 cents," Hutchens said, "so it's pretty easy to see how fuel and energy costs impact food price."

The bottom line, he said, is corn growers believe the grocery group's campaign is simply an attempt to take consumers' eyes off its members' profits.

"Many of GMA's members are enjoying bigger profits this year because they are raising prices, but placing the blame for those prices on the back of American farmers," Hutchens said. "It's a classic blame-shifting tactic. It's a charade, but it's one they can only keep up if corn prices are rising. "Corn growers are working hard to produce this year's crop, he said, and Nebraska's corn crop is in very good condition overall. "In fact, most corn across the entire Corn Belt is in good condition," Hutchens said.

Kraft Foods, one of the key players in the Grocery Manufacturers Association efforts to blame higher food prices on corn farmers, announced quarterly profits this week of $879 million, up 10 percent from last year's second quarter.

The Nebraska Corn Board is a self-help program, funded and managed by Nebraska corn farmers. Producers invest in the program at a rate of 1/4 of a cent per bushel of corn sold. Nebraska corn checkoff funds are invested in programs of market development, research and education.

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