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Ethanol not to blame for cheese prices, trade group says
July 26, 2007
OMAHA, Neb. —The Ethanol Promotion and Information Council, an ethanol industry trade association, issued a statement July 26 in response to reports that Marshall, Minn.-based Schwan Food Co.'s retail grocery unit was raising the price of its pizza and snack products. The company blamed the rising demand for ethanol as the primary reason for hiking prices approximately five percent.
Schwan's product lines include Red Baron, Freschetta, Tony's, and Wolfgang Puck All Natural pizzas.
"The ethanol industry has become a convenient scapegoat for corporate America to justify price increases to maintain profits," said Tom Slunecka, executive director of the Ethanol Promotion and Information Council (EPIC). "The debate over rising food prices has bordered on the ludicrous; the facts are conveniently omitted from this argument."
Numerous industry analysts have cited the rising demand for corn used in ethanol production as the main reason cheese prices have increased more than 60 percent over the past year.Corn also is used as a cattle feed. (Read also, Cheese costs eating pizzeria profits.)
Numerous studies have shown that rising energy costs have a greater impact on food prices than a rise in corn prices, according to EPIC. A 33 percent rise in crude oil prices, which translates into a $1.00 per gallon increase in the price of regular unleaded gasoline, results in a 0.6 to 0.9 percent rise in the Consumer Price Index for food.
An increase of $1.00 for a bushel of corn would cause the CPI for food to increase by only 0.3 percent, EPIC officials said.
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