July 18, 2008
Utah Growers Not Profiting From Soaring Food Prices
By Laura Hancock Deseret News
PARK CITY -- Food prices may be rising, but at the Utah Farm Bureau conference here on Thursday, local farmers and ranchers said they have seen little of the profits.
"Eggs had been selling for 60 cents, and now they're what, $1.20?" said sheep rancher Pete Stamatakis, who lives near Price. "It's a catastrophe. But people should pay for their food. The people who raise it don't make any money."
The economy and energy were the main topics discussed at the midyear conference, which continues through today. About 300 people are attending.
Food prices in recent months have increased at twice the rate of inflation, said Jim Olsen of the Utah Food Industry Association. Globally, food prices have risen 80 percent in the past three years.
In the United States, the price of corn, which farmers sell for human and animal consumption, has doubled in part due to a federal mandate passed in December that requires about one-third of U.S. corn be used for the production of ethanol. "These federal policies create market distortions and create excessive inflationary pressures," Olsen said.
Corn ethanol is controversial because it takes a large amount of energy to produce, and the production process is expensive. Lt. Gov. Gary Herbert told conference attendees that there's a political reason why U.S. politicians have invested so much into corn ethanol: They want the backing of the Iowa Caucus, which helps winnow down the number of contenders for the White House. Iowa produces a large portion of the nation's corn, and no presidential candidate will risk votes by telling Iowans that corn ethanol isn't viable, Herbert said.
"That's the part of politics that gets in the way of trying to find solutions to the energy dilemma," he said.
Stamatakis has spent thousands of dollars more this year on corn for his sheep, and he doesn't know if he'll be able to recoup the cost when he sells his lambs this fall. Last year, he got about $1.10 per pound.
"You could make money if you got $1.40 or $1.50," he said. But he believes he is mostly at the mercy of the buyers. One year he tried to negotiate and they wouldn't meet his price, so he kept the lambs through the winter and sold them at a loss the following spring.
Fuel costs are another reason why food prices have increased. A year ago, a gallon of diesel was about $3 a gallon, now it's nearly $5. At least 935 truckers nationwide went out of business during the first quarter of 2008, and David Creer, executive director of the Utah Trucking Association, told the conferencegoers that he expects even more trucking companies failed in the second quarter.
"You're going to see tremendous freight rates," he said. "The freight rates are just going to skyrocket."
Page and Kerry Cook, dairy farmers in Wayne County, said they have been absorbing high fuel costs. They pay to ship milk from the dairy to a processor, and they pay to haul feed to the farm. "We get fuel on both ends," Page Cook said.
Kerry Cook says the price of milk hasn't increased enough to cover his costs. He watches the price of string cheese. At Wal- Mart, four packages of string cheese cost $1 last year, and that price hasn't changed this year, he said.
Page Cook says they are hoping for a turnaround: "We hope the milk price goes up and the fuel price goes down. And we hope we're still there when that happens."
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