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Source: The National Corn Growers Association (NCGA)

A report from the Federal Reserve Bank of Kansas City provides a detailed look at historic and projected increases in food prices. While higher prices for commodities such as corn play a part in price increases for certain food segments, the report states, so-called “marketing costs” – defined by the bank as the difference between the farm value and consumer spending for food – drive the overall increase seen.

“Too often, corn and ethanol demand are blamed for high food prices overall,” said Ron Litterer, president of the National Corn Growers Association (NCGA). “This report reaches the same conclusion as many other studies in showing that the cause of higher food prices is a lot more complex than some pundits think.”

The bank report states that the marketing cost of food, as a percentage of overall food prices, has increased from 59 percent in 1959 to 80 percent today, due primarily to rising labor and energy costs.

Even though higher commodity prices do have a larger impact certain food groups, it is important to note that farm costs vary greatly depending on how processed a food is, the report says, citing federal governmental statistics: “USDA reports that farmers receive 19 cents from every dollar spent on a bag of wheat flour, but only 5 cents from a dollar spent on a loaf of bread and just 4 cents from a dollar spent on a box of corn flakes.”

Full report: http://www.kansascityfed.org/RegionalAffairs/MainStreet/MSE_0108.pdf
 

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