GoodFuels

Food Prices Down, Ethanol Production Up

The whole theory that increased ethanol production leads to higher food prices is proving to be a total red herring this year.

The latest market basket survey from the American Farm Bureau Federation shows that retail food prices at the supermarket are about 10 percent lower than last year at this time.

Meanwhile, ethanol production is up compared to last year, according to Energy Information Administration statistics. As of June, ethanol production this year is well over 4.9 billion gallons - compared to just over 4.3 billion this time last year - which is up about 15 percent.

According to USDA’s June Agricultural Prices report, the price of corn was $3.93 per bushel, which was down $1.54 from June 2008.

I’m not an economist - I don’t even play one on the Internet - but what these numbers say to me is that there is no direct correlation between food prices and ethanol production. But, that’s just me, what do I know?