In the current situation of ever soring gas prices, many people are looking for a solution to wean our country off of our gluttonous appetite for foreign oil. One of the solutions over recent years has been the use of Ethanol to moderate prices at the pump. One of the issues that are often brought to the attention of many in regards to the use of Ethanol is the effect it has on food prices. Opponents of the wide use of Ethanol in our fuel supply blame the rise of food costs directly on this attempt to go green. But with food companies showing record profits over the last several years is this truly the case, or is “Big Food” using the lack of education on the issue to blacken their ledger entries.
One of the blogs that I found that gives an interesting perspective on the issue of “food vs. fuel,” can be found at http://ethanol.typepad.com/. This blog has posts from various members of the American Coalition for Ethanol. The blog is designed in a clean, easy to read format that puts more emphasis on the content, as opposed to the overall look of the website. Although attractively designed blogs can be appealing, many of these sites are not user friendly, and make navigating them for information a challenge.
One of the posts that I found to be most intriguing was posted by: Ron Lamberty, Vice President / Market Development, American Coalition for Ethanol, and titled, “Big Food's (very profitable) blame game.” Lamberty points out some basic, yet widely unknown facts in regards to the food industry. How is it possible to have such a crisis in speaking of corn production, yet have industry related companies showing record profits? When reading over this entry I could not help but think of the record profits that were posted by our countries leading oil companies in the midst of an oil crisis. It is fairly obvious that “Big Oil,” took advantage of the perceived shortage of petroleum in order to boost their profits. Is it possible that “Big Food” is doing the same?
I often ask myself why the food industry is not subject to regulation when it comes to pricing. Take electricity for instance. It is regulated by the federal government because it is considered a basic necessity, is not food the same? We can all remember the effects of deregulating essential markets (such as electricity and natural gas), can have. Enron was at the forefront of deregulating natural gas, soon to be followed by electricity. The effects of this were rolling black-outs in California, followed by a spike in electrical costs. A deregulated market can be quite expensive for the consumer.
Would price control on essential food groups damage the free marketplace? This is a reasonable question to ask. I believe that with an adjustment in marketing, “Big Food,” could maintain its profitability. Marc Rauch from “theautochannel.com,” points out in his response to a Washington Post article “How biofuels contribute to the food crisis,” that the actual cost of food is minuscule compared to the packaging that it is sold in. Food companies could go a long way in reducing the cost of their product if they focused on the quality, as opposed to the elaborate packaging in which it was sold. Maybe cost regulation would force them to refocus their efforts. Unlike the option of driving less to reduce the cost an individual will spend in a month on fuel, cutting back on food consumption is not a realistic option. In most cases, families will choose to purchase less expensive food items that are loaded with empty calories, and have a lack of nutritional value. This certainly contributes to the overall decline in health of our nation, while adding to the ongoing problem of childhood obesity. These effects can and will have devastating consequences on the cost of healthcare in the future.
With the economic situation that we are facing as a nation currently, meditating on some of the information providing in this blog might help us better understand the actual reasons for the rise of food cost.
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