Repercussions

I've mentioned the unintended consequences the sudden mad rush to produce ethanol for fuel is generating. Rising cost of animal feed has already been seen and is predicted to go higher. The last warnings being generated focused on meat prices. They will continue to rise as feed costs skyrocket. At that time I predicted there would be more bad news for consumers. Told ya so. There are now dire warnings that diary product prices are set to climb sharply in the near future. (I'll bet the next price jumps are going to be felt in soft drinks and consumer foods that use corn – especially high-fructose corn sweeteners.)

STATE COLLEGE, Pa. – Dairy economists predict the retail price of milk could rise as much as 30 cents per gallon — a 9 percent jump — by fall. The reasons include rising fuel and feed costs for farmers and increasing demand for milk products around the globe.

The average retail price of whole milk could rise to $3.35 per gallon by October, up from $3.07 in January, said Ken Bailey, an agricultural economist at Penn State University who specializes in the dairy industry.

A U.S. Department of Agriculture forecast also predicts an increase in the price that processors pay to farmers for raw milk. That is typically an indicator that the retail price of milk also will rise.

Yet seesawing milk prices seem to have little effect on the buying habits of consumers like Celesta Powell.

Powell buys four gallons of milk every week for her four children, and even with milk prices expected to rise, she says she has no plans to cut back.

"You can't look at cutting your kids back on milk," she said after loading several bottles of milk from Meyer Dairy store into her minivan recently. "What are you going to give them, soda?"

When the average price of milk rose 19 percent in the spring of 2004, milk purchases declined less than 4 percent, said Stephanie Smith, a Denver-based nutritionist and spokeswoman with the National Dairy Council.

Despite being hideously inefficient, they push to produce ethanol is reaching a fever pitch (there are several facilities under construction or in the planning stages all over the region I live in). And there will be dramatic – very dramatic – impacts on American consumers as a result. These surging prices will, as always, hurt the poorest of Americans the worst. Yet another unlovely repercussion of the agenda-driven rush to ethanol.

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5 Responses to Repercussions

  1. Pingback: The Thunder Run

  2. These surging prices will, as always, hurt the poorest of Americans the worst.

    To me the words “poor” and “American” cause a bit of confusion. This is how I would phrase it:

    These surging prices will, as always, hurt the poorest least wealthy of Americans the worst.

    As to the topic, we aren’t seeing a vast movement to reclaim all the abandoned farmland and turn it into fields of ethanol. There is not a significant increase in production. And there won’t be until prices rise to a level that will make it profitable to open new farming operations. _That’s_ how a market economy works.

    Just because more people want corn does not translate immediately into more production. But try telling that to the Watermelons.

  3. Tom says:

    Thanks, Al… Wonder if he’s invested in grain futures as well as carbon credits?

  4. crosspatch says:

    Don’t forget all those biodegradable grocery bags folks have to use in California now … made of corn products.

  5. Pingback: Blue Crab Boulevard » Deadly Consequences

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