Corn ethanol: Burning up food budgets

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"While Nebraskans are closely watching gas prices escalate at the pump, they are also starting to see something else eating away at their budgets: rising food costs,” says AMI President and CEO J. Patrick Boyle in a guest editorial published today in the Lincoln Journal Star

Boyle notes that according to March's Consumer Price Index (CPI), the general "at home" food category has risen 3.6 percent over the past year and retail meat prices are climbing even higher. Beef and veal prices rose 12.2 percent higher than March 2010, the largest year-over-year increase in the beef and veal CPI since September 2004. Retail pork prices rose 11.2 percent from last year's level.

“While food prices are nudged upwards by some factors beyond our control — like floods, droughts and growing middle class demand in developing countries — there is one underlying domestic factor that we can control: burning our food and feed in our gas tanks,” Boyle adds. 

Boyle goes on to explain that fuel blenders are obligated under a federal mandate to combine a certain amount of eligible biofuels into the gasoline they sell and they rely almost exclusively on ethanol derived from corn. And although its production is already mandated, the blenders receive a tax credit for incentive, at the expense of the American taxpayer, of 45 cents per gallon of ethanol they produce.

Because of the ethanol mandate and subsidies, demand for corn and in turn its price, has skyrocketed.  Some analysts expect prices could top $8 a bushel this spring.

This puts tremendous pressure on the meat and poultry supply, where corn is an important part — and in some cases the largest part — of the diets of animals produced for food like chickens, turkeys, cattle and pigs.

Boyle explains, “…with corn being so expensive, it is more difficult for many farmers and ranchers to remain profitable and continue feeding their livestock. Unable to afford feed, farmers and ranchers are reducing the number of animals they are raising or are ceasing raising livestock altogether…which means fewer animals for the meat supply. This is Economics 101 — as the supply of meat shrinks, the price goes up at the local grocery store.”

“It's in all of our best interests to develop alternatives to gasoline as fuel for our cars. But the Obama administration and Congress need to focus on fuel sources that do not compete with our food and feed and should support proposals that aim to limit federal support of corn ethanol,” Boyle concluded.

“In the meantime, when Nebraskans see a "May Contain Up to 10% Ethanol" sign at the gas pump, they need to realize that their grocery bill contains ethanol, too, in the form of higher food prices.”

Click here to read the op ed in its entirety.

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South Dakota  |  April, 20, 2011 at 04:40 PM

Mr. Boyle is spreading nothing but misconceptions. AMI wants cheap corn. Plain and simple. Right now livestock producers are not hurting or crying about feed costs, its just an agenda by AMI. I find it absolutely disgusting how Mr. Boyle attempts to place the blame for higher food costs on ethanol saying it takes away from feed when he is well aware that 1/3 of the corn used for ethanol comes back as distillers grain which is widely used by the livestock producers that support his business. DDG's helped displace the need for 1 million bushels of corn for feed in the U.S. during 2010 and he leaves it out all together in his article. Just last month the USDA broke down the food dollar showing that only 11.6% goes back to the farm which down compared to energy related costs which was at 33%. If you are looking for an answer to higher food prices look no further than the price of oil.

Stephen Worley    
Tennessee  |  April, 21, 2011 at 06:01 AM

There is a little (only a little) truth in what Boyle says here, but he conveniently forgets that supply and demand work in more markets than just grains. If we could remove all those "10% ethanol" signs and redirect all that corn into feed and food markets, the price of gasoline would skyrocket even faster than it has. What ethanol is costing consumers at the grocery it is saving them at the gas pump. It is high time for the cattle industry to quit whining about ethanol and realize that the fundamentals of energy and grain markets have changed, and to capitalize on the fact that cattle can utilize both forages and distillers grains much more efficiantly than our major competitors in the meat case.

Charles Carlson    
Colorado  |  April, 21, 2011 at 08:29 AM

Why is inflation running away with everything on the kitchen table? One huge reason is industrial food burning. Over 200 ethanol production plants are subsidized to manufacture a colorless liquid many think they would like to drink, but few want to use in an automobile because it is inferior to gasoline. Alcohol factories’ appetite for food-to-burn is literally insatiable, so commodity prices cannot seek normal market levels, as they always have in the past when temporary high prices took care of short supplies. The giant food burning mechanism is evil by nature in that it is already causing massive unnecessary starvation and death. Ethanol requires more petroleum to produce than it gives back in energy! From Ethanol: Burning Food, the Path to Global Famine, 2008

Russell Walker P.E.    
Aberdeen, NC  |  April, 21, 2011 at 02:22 PM

Carlson is right. Ethanol manufacture requiring the destruction of corn is not only raising the price of corn it is producing a politically correct but a scientifically disasterous product, namely ethanol from putrefaction. About 35% of the weight of an ethanol molecule is Oxygen which cannot support combustion. That is why any car gets fewer miles per gallon with an ethanol mix. Ethanol is a polar molecule which disoloves rubber or neoprene gaskets or seals in any car engine. State laws which mandate ethanol use ony serve to keep corn prices high. There is no reason why the US taxpayer should pay $0.45 per gallon subsidy for an inferior product which increases the prices on not just corn but beef, turkey and hogs. I have been a Chemical Engineer for over 40 years.

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