Iowa State University economist Bruce Babcock says corn seems to be getting a “bad rap” for causing price hikes at the grocery store. “It is getting a bad rap and one reason why it’s getting a bad rap it’s so easy because corn is in almost all the food that we eat,” Babcock says. “People just think, ‘Well, if the price of corn has gone up $3 or $4 a bushel, that must mean it’s responsible for everything that’s happening with food prices.”
High-fructose corn syrup is an ingredient in many foods and is in nearly all soft drinks, but Babcock says it’s an incredibly small portion of each bottle or can of pop that’s sold so the per bushel price of field corn isn’t having “much” of an effect on the prices of soft drinks. “Really where almost all the corn in our food supply is going is in livestock feed and so as feed costs go up we’ll eventually see higher meat prices because of that,” Babcock says. “…Up until ethanol came in, that feed use of corn (accounted for) the vast majority of the corn crop.”
Some critics say rising corn prices are also raising prices at the pump. Gasoline prices for some premium blends have crossed the four-dollar-per-gallon threshold at some Iowa stations. However, Babcock says research suggests corn-based ethanol fuel is actually helping to reduce the cost of a gallon of gas, if it’s an ethanol blend. “A colleague of mine, professor Hayes and his graduate student, did a study on that and they came up with about 30 cents a gallon,” Babcock says. “I did another kind of study that said, ‘Given where we are today with ethanol what if we backed off a little bit? What would it be?’ and so if you had a 20 percent reduction in ethanol production, I estimated somewhere about four or five cents a gallon. Not big, but every little bit helps, I think.”
Babcock made his comments during a recent appearance on Iowa Public Television.