WILLMAR, Minn. - The steepest increases in food prices since 1990 are hurting grocery shoppers, restaurants and school cafeterias.
But there are winners in the new food economy, including crop farmers selling corn and wheat at near-record highs after years of crushingly low prices. Also, ingredient-makers such as Cargill Inc. and Archer Daniels Midland Co. are rife with profit, and fertilizer and tractor companies are cashing in.
In addition, hedge funds that made big bets on rising wheat, soy and corn prices were spectacularly correct.
The nation's farmers saw their average household income climb about 7 percent last year to more than $83,000. In grain-rich states, the results were dramatically higher. In Minnesota, for example, the median income - that is, half earned more and half earned less - for crop farmers soared 80 percent to $95,000.
Take Chad Willis, who raises corn and soybeans on 550 acres near Willmar, Minn.
He sells his grain nine miles up the road from an ethanol plant in which he invested. His family cars are powered by an 85 percent blend of the corn-based fuel. His black-and-gold-trimmed cap reads "E85 Everywhere."
He knows that grocery shoppers jolted by higher prices for cereal or eggs or chicken blame ethanol, which consumed 20 percent of last year's corn crop.
In between Willis' farm and town, the owners of Haug Implement, a Deere & Co. farm-equipment dealer, are having some of the best times anyone can remember. Haug sells farm tractors that can run $160,000 or more and combines that can cost $300,000.
The reason for the prosperous times? Corn, soybean and wheat prices have been pushed to record or near-record highs by a combination of high demand and new money from hedge fund traders who used to show little interest in those markets.
"I got grain farmers - a ton of them - who are going to improve their net worth this year . . . by a half a million bucks minimum," said Peter Georgantones, president of Investment Trading Services, a commodities brokerage in Bloomington, Minn.
The International Monetary Fund estimates biofuels accounted for almost half the increase in consumption of major food crops in 2006-07, propelling prices for corn, other grains, meat, poultry and dairy products.
Others dispute that. A report last month from the Agricultural and Food Policy Center at Texas A&M University said higher corn prices had little to do with rising food costs. It said other factors, such as rising energy costs, have been at least as important.
Willis, the Minnesota farmer, is quick to point out that farmers pay some of their profit right back to their own suppliers.
The liquid propane that runs his corn drier cost $1.55 a gallon last year. He has been told to expect a price of $2 this year. Fertilizer last year ran $115 per acre. This spring, it is costing double that.
While virtually all businesses are contending with higher energy costs, the rising commodities prices are proving to be bottom-line boosters for other sectors:
Profit at seed- and pesticide-maker Monsanto Co. reached about $1 billion last year, a fourteenfold increase since 2003.
Profit has tripled, to $1.1 billion, at agricultural-chemical-maker Syngenta AG.
The agriculture divisions of DuPont Co. and the Dow Chemical Co. also have seen their earnings balloon.
Cargill, which makes ingredients and trades in commodities markets, boosted its profit to $2.3 billion, up nearly sixfold since 2001.
Profit at agricultural processor Archer Daniels Midland has more than quadrupled, to $2.16 billion, during the same period.
Third-quarter profit at the Mosaic Co., a fertilizer-maker, jumped tenfold, to $520.8 million, because strong demand from farmers gave it power to raise prices.
Companies such as Deere, the world's biggest maker of farm machinery, are in the midst of flush times, too. Between 2005 and 2007, Deere's net profit rose more than 25 percent to $1.8 billion.