Corn and consequences

It's coming. Until we find a) a non-corn-based ethanol system or b) a non-corn-based livestock system, we're going to see fuel and meat going head to head. Consequences are a bummer.

Ethanol's demand for corn raising meat prices

By Tom Johnston on 3/12/2007 for Meatingplace.com

USDA indicated in a report late last week that the ethanol industry's robust demand for corn is elevating the cost of livestock and will hike prices for beef, pork and chicken.

The agency says ethanol is consuming 20 percent of last year's corn crop and is expected to use 25 percent of this year's harvest, driving up the price of corn. The average price of corn is $3.20 a bushel, up from $2 last year.

Higher feed costs will reduce meat and poultry production. The National Chicken Council reported that the price of corn has forced a 40-percent increase in the cost of feeding chickens, and poultry will soon cost more at retail.

Deputy Agriculture Secretary Chuck Conner said USDA is closely monitoring corn supply and demand, which is likely to force farmers to plant more acres of the crop.

"We do have confidence in the marketplace's ability to react," Conner said. "We believe producers are seeing the market saying, 'I need more corn, not only for ethanol, but for our feed needs in this country."

However, USDA announced that a mere 4.1 million acres will be withdrawn from the Conservation Reserve Program in the next four years, ruling out the possibility, as economists have suggested, that it be used for extra corn production. The CRP program pays landowners to take out of production land that is highly erodible or otherwise environmentally sensitive. Its holdings are often used as hunting preserves.

Meanwhile, USDA has formed an ethanol panel to address the effects of ethanol and other biofuels on animal agriculture, a move urged by NCC, the National Pork Producers Council, American Meat Institute, National Turkey Federation, National Cattlemen's Beef Association and National Milk Producers Federation.