May 31, 2008

Popping the popcorn myth

We'd thought the popcorn myth - that ethanol is making popcorn prices go up at movie theaters -- had been popped a year ago. In fact, the Iowa Renewable Fuels Association did a great campaign to make the point. And yet we've seen a few reports about that again this year.

To help explain it, here's a quote from IRFA executive director Monte Shaw from an August 2007 news release:

The ‘blame ethanol’ game has gotten completely out of control. From a consumer standpoint, for $5 you can buy 1 tub of popcorn at a movie theater or 38.5 pounds of popcorn from a farmer, which, when popped fills nearly 12-33 gallon trash bags. From a farm standpoint, in 2006 the farmer received about 1.4 cents for the corn in that $5 tub at the movie theater. In 2007, that same farmer will receive about 2 cents to fill that tub. How can an increase of 0.6 cents to the farmer justify a price hike to movie goers or crazy headlines in the news media?

A recent article in Advertising Age started quite off track - saying that ethanol was driving up corn demand and taking away acres from popcorn production. Pretty crappy. But after the first few paragraphs the truth came out -- that popcorn prices were going up to help theaters cover the high cost of movies. Everyone knows that concessions are how theaters make their money, right? (Ticket prices go to the folks who make and star in the movie.)

And then, my favorite line:

... the price of the paper pulp to produce popcorn tubs has jumped 40% in the past 36 months, making the tub more expensive than the corn inside it.

So...we're paying $7 for a tub of popcorn...which contains 2-3 cents worth of corn. And the tub costs more. How does ethanol even enter into this at all?

UPDATE: The Nebraska Corn Board has sent out a press release on this subject. Check it out here.

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