Anti-ethanol advocacy fuels an exchange of letters

Sabrina Wu, a graduate student in my class on U.S. Food Policy, contributes this blog post:

On October 28, 2008, Senator Chuck Grassley sent a letter to Grocery Manufacturers Association’s (GMA) CEO and President C. Manly Mopus (.pdf) demanding to know when and how GMA and the trade association’s 300+ member companies plan to reduce retail food prices to reflect recently lower input costs.

From the letter: “When oil prices and commodity prices rose earlier this year, food processors and grocery stores reflected their higher input costs almost immediately, passing them onto consumers. However since commodity prices have declined over the past three months, we have seen retail food prices continue to rise.”

This letter is the latest correspondence in a back-and-forth between Grassley and GMA, which started in May 2008. At that time, GMA was outed by Roll Call, a Capitol Hill newspaper, for spearheading a multi-million dollar anti-ethanol campaign (.pdf).

The GMA campaign launched a website, providing consumer information on ethanol’s impact on food prices and an opportunity for visitors to express opposition to ethanol policies via an online petition; formed a broad-based advocacy coalition with largest representation from the food industry and livestock associations and a smattering of environmental and anti-hunger organizations; and funded research, including an economic analysis on ethanol’s long-term effects on commodity and retail food prices (.pdf) and a telephone survey to assess taxpayers’ concern about food price increases and opinion on ethanol policies. Results from both support GMA’s position of reducing or eliminating ethanol subsidies and mandates.

Grassley, senior U.S. senator from the corn state of Iowa and strong supporter of ethanol, vociferously opposes the GMA campaign. A few days after the Roll Call article came out, he delivered a statement about the “smear campaign” on the Senate floor and posted documents from GMA and Glover Park Group, the public relations firm with whom GMA contracted to coordinate the campaign, on his website. “They’ve outlined their strategy of using environmental, hunger and food aid groups to demonstrate their contrived ‘crisis,’” Grassley said. “I think it’s important for policy-makers and the American people to know who’s behind this effort.”

One week prior to Grassley’s letter, the major U.S. livestock trade associations—American Meat Institute, National Cattlemen’s Beef Association, National Chicken Council, National Meat Association, National Milk Producers Federation, National Pork Producers Council, National Turkey Federation, and United Egg Producers—sent a letter to Secretary of Agriculture Ed Schafer objecting to proposed plans to provide rural development loans to ethanol plants, who are struggling to pay above-market rates on corn purchased through futures contracts. They write, “High commodity prices have been wreaking havoc in animal agriculture for almost two years. Yet no one at USDA has suggested that the government could provide loan funds to cover our members’ losses in the corn market.” And: “We urge you to rethink your intention of selectively lending taxpayer funds to private facilities that are having difficulty with the price of commodities.” This objection marks a departure from the livestock industry’s long-standing support of selective subsidies, namely commodity payments, which also address “difficulty with the price of commodities” and as some have argued, indirectly subsidize livestock producers by keeping the price of animal feed low.