Sen. Charles Grassley, R-Iowa, one of the Senate's two working farmers and a longtime ethanol booster, said he finds it hard to believe that ethanol could be "clobbered the way it's being clobbered right now" over the issue of food costs. What does the cost of corn have to do with the price of wheat or rice, he is telling people.It's called the Law of Supply and Demand, Senator. Ethanol production has increased the demand for corn, causing its price to rise. This will have two effects:
- Corn consumers will switch to wheat or rice, causing price rises for those grains.
- Farmers will, if they can, switch from producing other crops to producing corn. This decreases the supplies of these other crops, also causing price rises.
It's really sad when a United States senator displays such ignorance of basic economics.
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