Grassley urges GMA to lower food prices

By Anna Austin | October 06, 2008
Web exclusive posted Nov. 3, 2008 at 10:20 a.m. CST

Commodity prices have continued to fall since corn reached its record high price of $8 per bushel in July, but the cost of food hasn't budged. Consumers and ethanol advocate U.S. Sen. Chuck Grassley, R-Iowa, are curious as to when and if they will see relief at the grocery store.

On Oct. 28, Grassley sent a letter to Grocery Manufacturer Association's Chief Executive Officer and President Manly Mopus, which directly inquired as to when food prices were going to be lowered. Earlier this year the GMA was a major headliner behind the "Food Before Fuel" campaign, which was intended to convince legislators and the public that ethanol was the major driver behind the record high gasoline and food prices.

Since the campaign was launched Grassley has publicly expressed his disproval numerous times. He initially invited 15 GMA members to a roundtable discussion of current biofuels policies and their impact on commodity and food prices; 14 representatives declined to attend.

According to Grassley, in early October GMA's Vice President of Federal Affairs Scott Faber was quoted by Salt Lake City's Deseret News saying that food manufacturers have absorbed a lot of the costs of higher commodity prices, which will be reflected in the grocery aisle.

"Yet, today prices for corn futures are at $3.85, soybeans at $8.93, and wheat at $5.29, all nearly 50 percent lower than they were this spring," Grassley wrote in the letter to the GMA.

In the letter Grassley cited a statement made by the GMA in April, which said: "The federal government's food to fuel mandates are diverting one-fourth of America's corn supply from kitchen tables to fuel tanks, and the result is corn selling for $6 a bushel. And the ripple effects are being felt through the economy. In tough times like these, when many families are struggling, Congress and the administration need to take a hard look at the unintended consequences of these food to fuel mandates that raise food prices without offering a significant environmental benefit."

"Since the smear campaign was launched last spring, I've been calling for intellectual honesty regarding ethanol and its role in the economy," Grassley stated in the letter. "Recent changes in the market confirm that many factors contributed to higher food prices during the last year."

Grassley exemplified his statement by pointing out that oil has dropped to $65 per barrel, significantly lowering prices at the pump. "The fact is, the amount of corn currently projected to be used by the ethanol industry this year is identical to the usage projected in May when the GMA was doing everything it could to make ethanol the scapegoat for the rise in commodity and food prices," he wrote. "Subsequent events clearly prove that ethanol was not the primary driver of those corn prices."

According to Grassley, Faber was quoted in the Wall Street Journal on Oct. 16 to say "the impact of higher corn prices is continuing to work its way through the value chain and will be reflected in higher grocery prices for some period." Grassley noted that when food and commodity prices rose earlier this year, food processors and grocery stores reflected their higher input costs almost immediately, passing them onto consumers.

"This indicates that while food processors are willing and able to immediately blame ethanol and rising corn prices for having to increase retail food prices, they won't be extending the same courtesy of lowering those prices with lower corn and oil prices," Grassley said in the letter.

Grassley concluded the letter, imploring the GMA to help consumers who are losing jobs, finding it hard to make ends meet and put food on the table. "Now that grain and energy prices have nearly been sliced in half, surely we can expect that the grocery manufacturers will pass on these savings to American consumers who are suffering from economic hardship," he wrote. "Please let me know how the GMA and its member companies plan to reduce food prices commensurate with lower input costs. I also look forward to your assurances that this will happen soon, so that consumers can measure the benefit."

To view a copy of the letter, written by Grassley to the GMA, visit http://blog.foodpricetruth.org/wpcontent/uploads/2008/10/grassley-letter-to-gma2.pdf.