Food Fight Coming To You

It’s not too often that we see agricultural news in the first section of The Wall Street Journal. Last Thursday, however, not only did we see one article, we saw two.

The first was about the possible impact on agriculture the affects of the climate change legislation might have. The second explored the impact of the Obama administration easing sugar tariffs and what it would do to the industry.

While farms and ranches have been excluded from many carbon emissions restrictions from previously passed House legislation, many larger agricultural firms and food suppliers, like Tyson, Cargill and General Foods, are believing they got the short end of the stick. According to The Wall Street Journal, an informal group of such companies will shortly be releasing a slew of studies showing how neglect of their efforts in limiting carbon emissions, thus also limiting their ability to sell these credits to other polluting firms in cap-and-trade schemes, will affect food prices.

The inability to sell such credits would, according to these companies, result in increased food costs.

Feedlots would like to generate carbon credits by efforts such as reducing greenhouse gases through trapping methane gases in manure lagoons. Food processing companies worry about greenhouse gases emitted in truck transport and by using natural gas in meat slaughtering plants.

While the House passed such climate legislation this past July, the Senate won’t tackle it until they return from their recess in September.

Many fear that this argument may bring back the old “Food vs. Ethanol” fight in which food processors previously complained vigorously that, because of the increased demand by the ethanol industry for corn and soybeans, the price for food greatly increased. This argument was heavily pursued by the Grocery Manufacturers Association which, subsequently, was pretty well shot down when it was shown the insignificant effect the price of raw materials had on food prices.

The second “food fight” heading your way is the annual warning to consumers about shortages and higher prices for foods containing sugar. This, because of the high tariffs on imported sugar — the result of some excellent lobbying by North Dakota sugar beet growers and southern cane producers.

Raw sugar prices have been rising rapidly lately due to more demand than growers can produce. Recent monsoons in India have severely restricted production in that country and the world’s largest sugar producer, Brazil, is diverting massive amounts of cane into ethanol production.

U.S. growers argue that, because the cost of raw agricultural ingredients makes up such a small proportion of the final cost to consumers, tariffs on imported sugar should not be reduced. Hmmm!

Seems to us that this tends to harken back to the Grocery Manufacturer’s Association argument that, because of so much grain being used for ethanol, rather than food products, the cost to consumers would naturally go up. That argument has come up a cropper as ethanol plants are now closing faster than they’re opening. With demand for corn now considerably lower for fuel, where are those lower food prices?

Could it possibly be that, because of increasing profits, higher labor charges and ever higher shipping fees — these have more to do with raising food costs than do the raw ingredients?

With the importance of food, it’s unfortunate that the economy of its production, processing and distribution seems to play “second fiddle” to every conceivable consumer ill that comes down the pike. But, never mind that food is absolutely vital to the welfare of this and every other country. With less than 2% of the U.S. population now living on farms, why should congress be concerned about food policy?