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    Trade Groups Blast Food-to-Fuel Program for Blasting CPI

    New CPI data for March shows government programs are driving up food costs too fast, say GMA and NGA.

    Congress must re-examine food-to-fuel mandates and the resulting costs that are hurting consumers and food retailers, said industry leaders yesterday following the release of Consumer Price Index (CPI) data for March 2008.

    The United States Bureau of Labor Statistics CPI data showed food and beverage prices rising at an annualized, seasonally adjusted rate of 5.1 percent for the first three months of 2008. This data followed the release of the Producer Price Indexes (PPI) on Monday, which showed that finished food prices are rising at twice the rate of all other finished goods prices.

    "Federal food-to-fuel mandates have led to over one quarter of corn to be diverted from food to ethanol production, driving up the price of corn and other commodities to historic highs," said Scott Faber, v.p. of federal affairs for the Grocery Manufacturers Association. "The data released today proves that the result has been devastating for American families: This is an unsustainable pattern that must be addressed.

    The new data is a concern for grocers, independents as well as chains, sais the Natrional Grocers Association.

    "N.G.A. members, as well as the global community, have become increasingly concerned with the various incentives, tax credits, that the U.S. Government has provided to users and producers of ethanol, and the adverse consequences that these incentives have had on the cost of food," Frank DiPasquale, s.v.p. of NGA and executive dir. of GREF told Progressive Grocer. "Currently there is proposed legislation in the Farm Bill that would increase these food for fuel incentives - at a time when our economy can least afford an increase in (price) inflation - and parts of the world grapple with food shortages."

    What's more, trade officials said they see no end in sight.

    "This new information comes hard on the heels of this month's PPI data, which reported that the cost of 'intermediate food' - such as flour, meat, and prepared animal feed - rose at an annualized seasonally adjusted rate of almost 40 percent the first three months of the year," GMA's Faber added. "These rates will only increase following the USDA's report that farmers will plant less corn in the coming year. Before these effects spread further across our economy and around the world, Congress should take immediate action by revisiting food-to-fuel mandates."

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