CHICAGO — The increasing use of ethanol as an alternative fuel source is having a greater impact on food prices than many supermarket operators might think, according to Tim Hammonds, president and chief executive officer, Food Marketing Institute, at the FMI Show here last week.
“I think our industry is underestimating the impact of this,” he said. “We will reprice food because of this.”
Demand for corn to be used in ethanol gasoline has driven up the price of the crop, which is used in a broad array of food products. The increased demand for corn is also displacing the acreage farmers are devoting to other crops, noted Michael Sansolo, senior vice president, FMI. Canada's wheat yield is down, for example, he said.
Sansolo said the price of corn has doubled recently, from $1.90 per bushel to $3.80 per bushel.
“This is part of the ripple effect of energy change,” he said.
Hammonds pointed out that the U.S. government subsidizes corn growers, which in effect is subsidizing the ethanol industry. He suggested that instead, perhaps regulators should focus on regulating sugar imports, which compete with corn-based sweeteners, in order to “give corn a break.”