By DOUG SCHMITZ
Iowa Correspondent

WASHINGTON, D.C. — Republican Sen. Charles Grassley has asked the Grocery Manufacturers Assoc. (GMA) to either apologize for derogatory comments the nation’s largest supermarket lobbyist group made that appeared to blame higher food prices on ethanol production, or to simply lower costs before consumers reach the checkout lines.

“The fact is, the amount of corn currently projected to be used by the ethanol industry this year is identical to the usage projected in May when the GMA was doing everything it could to make ethanol the scapegoat for the rise in commodity and food prices,” the Iowa senator wrote in an Oct. 28 letter to C. Manly Molpus, GMA interim president and CEO.

According to Grassley, “subsequent events clearly prove that ethanol was not the primary driver of those corn prices,” adding that on the day he penned this letter, prices for corn futures were at $3.85, soybeans were $8.93 and wheat was $5.29, “all nearly 50 percent or lower than they were earlier this spring.

“Now that grain and energy prices have been sliced in half, surely we can expect that the grocery manufacturers will pass on these savings to American consumers who are suffering from economic hardship,” Grassley said. “Please let me and others know how the GMA and its member companies plan to reduce food prices commensurate with lower input costs.”

This spring, the GMA launched what he referred to as a “smear campaign” against the ethanol industry. Moreover, a nearly 20-page memo was allegedly leaked to the press in June by the Washington, D.C.-based Roll Call newspaper, detailing the GMA’s plans.

In an April 4 statement to the media, the GMA said the federal government’s food-to-fuel mandates were “diverting one-fourth of America’s corn supply from kitchen tables to fuel tanks, and the result is corn selling for $6 a bushel, an all-time high,” with “the ripple effects are being felt throughout the economy.

“In tough times like these, when many families are struggling, Congress and the administration need to take a hard look at the unintended consequences of these food-to-fuel mandates that raise food prices without offering a significant environmental benefit,” the GMA added.

To assist in its efforts, the GMA hired the Glover Park Group, a Beltway-headquartered public relations firm that had written the March 6 memo, to manage in what Grassley called a “stealth” campaign against biofuel. According to the memo, the GMA was instructing groups to organize to oppose biofuel, with the goal of pressuring Congress before the 2008 election.

“We need to spark real demonstrations of popular discontent with increasing food prices,” the memo stated. “Our strategy depends on sparking a high-volume, intense political battle. While political debates are never won or lost solely on the merits, it is helpful to have the facts on your side.”

But in his letter, Grassley cited GMA Vice President for Federal Affairs Scott Faber, who reportedly spearheaded the association’s nationwide anti-ethanol campaign that Grassley said was done “perhaps unintentionally for public consumption” to protect the bottom lines of grocery manufacturers and food processors.

“The food manufacturers are high-volume, low-margin companies that have initially absorbed a lot of the costs of higher commodities prices,” Faber was quoted by Grassley as telling the Desert News newspaper on Oct. 6. “But ultimately, higher commodities prices will be reflected in higher retail prices in the grocery aisle.”

Grassley said, however, when oil prices rose earlier this year, food processors and grocery stores “almost immediately” passed the higher input costs onto consumers. “(Since) commodity prices have declined over the past three months, we have seen retail food prices continue to rise,” he added.

Grassley said he had been calling for “intellectual honesty regarding ethanol and its role in the economy” since the start of the GMA’s campaign.

“Recent changes in the market confirm that many factors contributed to higher prices during the last year,” he said.
In June, for example, corn reached its peak price of $7.88, Grassley added. “However, in the last three months that followed, the price of corn was cut nearly in half,” he said. “Oil prices have also fallen, and as I write this letter, a barrel of oil is trading at $65, which is being reflected by lower prices at the pump.”

As a family farmer and a long-time partner in the production of the nation’s food supply, he said “the propaganda being used by the GMA and its high-paid lobbying firms in Washington, D.C., is patently false and should be disavowed.”

But Grassley said he doubts the GMA would be dissuaded to end its campaign against renewable fuels, despite the facts that absolve the ethanol industry of any blame for the higher food prices at the checkout line.

“Using ethanol for a scapegoat for increasing prices, (the GMA) got what they want,” Grassley told reporters on Nov. 4. “Even though corn is down, ethanol is down, they’re not going to reduce their prices.”

GMA executives had declined several requests for interviews.