Iowa Public Television

 

Rising Food Prices Upset Consumers and Presidential Candidates

posted on October 12, 2007


Hello, I'm Mark Pearson. Despite higher fuel prices and the worst housing slump in 16 years, the U.S. economy appears to be on stable ground.

The Commerce Department reported Friday that retail sales increased 0.6 percent in September, as a big jump in auto sales helped offset weak demand for clothing.

Since consumer spending accounts for two-thirds of all domestic economic activity -- -- and the increase was double what analysts had expected -- --the reports helped both the **Dow and **S& P post strong weekly closes on Friday.

Meanwhile, the falling dollar led more foreigners to buy American in August, **pushing the trade deficit down to its lowest point in seven months.

The politically sensitive trade deficit with China also declined, but remained on pace to surpass last year's record despite the fact that the Chinese economy ALSO is driving DEMAND for some commodities. Within 10 years China is predicted to import almost 50 percent of the world's oilseeds.

Even with robust global demand, America's burgeoning biofuels industry already is blamed by some for higher food prices.

Rising Food Prices Upset Consumers and Presidential Candidates Corporations are openly pointing the finger at commodities for the increased costs at the checkout counter. Food companies General Mills, Kellogg's, and Kraft Foods are boosting prices and shrinking package sizes to offset higher corn and wheat prices.

The nation's largest meat processor, Tyson Foods, already passes increased corn-related feed costs on to its consumers. But some economists estimate food companies have yet to pass entire production increases on to grocery store products.

The rise of ethanol and its relationship with the American economy is spilling over to the 2008 Presidential race.

Sen. John McCain, R-Arizona: "By the way, I have a glass of ethanol every morning for breakfast but I still don't support the subsidies and I don't think we need them. We should have sugar cane-based ethanol into this country and I don't think that subsidies are the answer."

Republican candidates, speaking during an economy-specific debate in Dearborn, Michigan this week, reflected a variety of opinions on farm programs.

Rep. Ron Paul, R-Texas: "We can't be bailing out farmers and subsidizing ethanol. This is just the wrong way to go. The American taxpayers pay for the subsidies and then they pay the higher prices when they buy the gasoline or buy the food."

Moderator: "Should the federal government determine whether ethanol makes economic sense? Or should the free market make that decision?

Fmr. Sen. Fred Thompson, R-Tennessee: "Ultimately it will be the free market. I think renewables and alternatives are part of that picture. I don't look for it to last forever. When the industry gets up and running and on its feet again I don't see the need for what we're doing now."

Moderator: "Governor Romney, you said government shouldn't get involved in business and free markets yet we subsidized farmers to the tune of $26 billion last year. Will the government end up bailing out farmers again?"

Fmr. Gov. Mitt Romney, R – Mass.: "I believe in domestic supports for our agriculture industry because I don't want to see our food supply in the same kind of jeopardy situation as our energy supply is in. And clearly there is a responsibility of government to make sure our farmers are treated on the same basis as farmers in other countries that we compete with."


Tags: agriculture campaign 2008 debates ethanol food housing news presidential candidates Republicans shopping