For the past two weeks, Mother Nature has had it in for the Midwest.  Tornadoes, straight line winds, and - in some cases - over a foot of rain have caused widespread damage from Nebraska to Ohio; and flood waters have devastated crops and communities in Illinois and Indiana. The price tag has been has been put in the hundreds of millions of dollars and is still climbing.

Yet, in the midst of all this human suffering and economic devastation, the big question being asked by the media is, “Will we have enough corn?”  In the past week, articles in such publications as the New York Times, USA Today, Chicago Tribune, Louisville Courier Journal, and the Indianapolis Star have bemoaned the devastation in the Midwest and predicted skyrocketing food and fuel prices as a result of our shortage of corn. 

The Louisville paper called it a “food crisis” which is an exaggeration far beyond reason.  The Chicago Tribune directly linked commodity and food prices when they said, “With food prices already high and corn now commanding record-high prices, the flooding in Indiana, Illinois, Iowa, Wisconsin and other states will likely push those prices even higher.” Again this is a gross distortion of the relationship between prices at the Chicago Board of Trade and prices at your local Kroger store.

While it is certainly true that the weather has led to a cut in the production of corn, it is not time to push the panic button.  In their latest production report, the USDA projected an average corn yield of 146 bushels per acre. While this is down from their previous estimate, it is far from a total crop failure.  We will produce a corn crop this year and most likely a pretty sizeable one. While not the bumper crop many had been hoping for, it is a crop that will meet the demand for corn. 

When Dr. Bob Young, chief economist with the American Farm Bureau Federation, was asked if we will have enough corn he said unequivocally “Yes.” He said the market will adjust the price to ration the supply to meet the demand.  Jim Riley, with Riley Trading, told me if things get worse we could see corn go to $9, but if things do not get worse corn will fall from its recent high of $7.  In either case, the supply and cost of food items at the grocery store will not change significantly.

A few weeks ago I tried to explain this point using some math that got some readers upset. So let me try again.   According to Dr. Young, on average, 25 percent of the retail price of a food product accounts for the ingredients to make that product, 20 percent accounts for the energy costs in making that product, 40% for the labor to process, transport, and package the product, and 15% for advertising, profits, and other costs.  So even if corn does go up to $8 or even $9 a bushel, it will not dramatically increase the cost of food. 

Now let’s talk abut another commodity market - oil. It is being forecast that crude oil prices may rise to $150 a barrel by the end of summer.  This too will increase the price of food.  Yet, I don’t hear the fear mongers forecasting a “food crisis” over the increasing price of energy.  This is the real crisis.  If oil goes to $150 a barrel, gas prices will likely reach $5 a gallon and consumers will not be able to drive to the grocery store to buy the food - no matter what the cost. 

While agricultural commodity prices are a part of what goes into setting the price for the food you buy, it is not as major a factor as those who have manufactured this food vs. fuel debate would have you believe.  This can not be said about gasoline prices.  Since the fuel we fill our tanks with is made up of 90% crude oil products, price hikes in oil have a big and almost immediate impact of the price at the pump. 
So next time you hear some “chicken little” crying that the sky is falling and the corn crop is failing, just remember: we will have enough corn, we will have enough food, and we will even have enough gas. However as someone recently said to me, “we selfish, pampered, over-consuming Americans” may have to make some adjustment to our budgets as the cheap food and cheap energy gravy train we have been riding for the past several decades comes to an end.

The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions or comments for Gary Truitt may write to him in care of this publication.