Consequences
Or why the rush to ethanol is a bad idea. 20 percent of last year's corn crop is being consumed by ethanol plants. Next year it will rise to 25 percent.
And the cost of animal feed is skyrocketing as a result. This will translate to higher and higher meat prices.
WASHINGTON - Strong demand for corn from ethanol plants is driving up the cost of livestock and will raise prices for beef, pork and chicken, the Agriculture Department said Friday.
Meat and poultry production will fall as producers face higher feed costs, the department said in its monthly crop report. Ethanol fuel, which is blended with gasoline, is consuming 20 percent of last year's corn crop and is expected to gobble up more than 25 percent of this year's crop.
The price of corn, the main feed for livestock, has driven the cost of feeding chickens up 40 percent, according to the National Chicken Council. The council says that chicken, the most popular meat with consumers, will soon cost more at the grocery store. The industry worries the competition from ethanol could cause a shortage of corn.
Corn prices have risen over 50% over the last year ($3.20 per bushel versus $2 last year). The price will continue to rise as demand increases. That isn't all, either. Although the article doesn't mention it, high-fructose corn sweetener is widely used in other products. Expect those prices to skyrocket as well. Yes, farmers will undoubtedly plant more corn as a result. But that will cause other consequences. Count on it.
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Blue Crab Boulevard » A Bad Harvest — Sunday, 11 March , 2007 @ 11:09 am
By Granddaddy Long Legs, Friday, 9 March , 2007 @ 2:36 pm
Geez. And a pound of chicken breasts already costs about nine bucks. How much higher can they go before a price war commences?
By feeblemind, Saturday, 10 March , 2007 @ 8:48 am
You are quite correct. Livestock producers, as price takers, will have to cut back production, in order to drive up product prices. It is already happening in poultry, and pork can’t be far behind. Will take longer for beef prices to adjust. The increased farmer income will vitually all flow to the landowners as farmers bid against each other to buy and lease more land. Scary part from the farmers’ point of view is if the government suddenly changes policy and pulls the rug out from under ethanol, leaving farmers that have bought inflated ground holding the bag. The sad part of it is that ethanol is at best only marginally helping the nation’s energy position and at worst is actually making our position worse. Just depends on whether or not you worship at the altar of ethanol.