May 18, 2008
Over the last week it has been reported that the Grocery Manufacturers Association has begun a public relations campaign to link ethanol with high food prices. The Roll Call first broke the story on Wednesday and since then has been commented on by some of my favorite blogs such as here, here, here, and here. And they all did a very good job of explaining the situation and I would encourage everyone to read those reports.
The one thing that I would like to add to the debate is how this is such a win/double win situation for food manufacturers. If they can convince the public that ethanol is the cause for high food prices they can basically write their own check. They will be able to raise food prices to any level they like, justified by costs or not.
And if they succeed in getting the ethanol policy reversed they win even bigger. High food costs will by that point already be established and food manufacturers input costs will be lowered. So they will be getting high prices for their products and have lowering input costs allowing them to write an even bigger check to themselves.