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E-CORN-OMICS: Food And Fuel Markets Begin To Merge In Ethanol Boom
By Mr Ethanol | May 5, 2008
Daily Herald:
Erwin Johnson picks up a clump of the dark, rich soil that he has farmed for 35 years, like his father and grandfather before him. In a few months, this flat expanse of northern Iowa will be crowded with corn ready to be trucked to market.
A year ago, that market got a little closer — and a lot better. Instead of sending his corn to a barge company to be shipped down the Mississippi River for export, Johnson now loads it into an open truck and sends it just two miles up the gravel road to a hulking new ethanol distillery that he can see from his field. The ethanol plant is paying him $5.50 or more a bushel, more than twice as much as Johnson could get just a couple of years ago.
“This is a fantastic time to be farming,” Johnson says. “I’m 65, but I can’t quit now.”
Across the country, ethanol plants are swallowing more and more of the nation’s corn crop. This year, about a quarter of U.S. corn will go to feeding ethanol plants instead of poultry or livestock. That has helped farmers like Johnson, but it has boosted demand — and prices — for corn at the same time global grain demand is growing.
And it has linked food and fuel prices just as oil is rising to new records, pulling up the price of anything that can be poured into a gasoline tank. “The price of grain is now directly tied to the price of oil,” says Lester Brown, president of Earth Policy Institute, a Washington research group. “We used to have a grain economy and a fuel economy. But now they’re beginning to fuse.”
Not everyone thinks it’s fantastic. People who use corn to feed cattle, hogs and chickens are being squeezed by high corn prices. On Monday, Tyson Foods reported its first loss in six quarters and said that its corn and soybean costs would increase by $600 million this year.
Those who are able, such as egg producers, are passing those high corn costs along to consumers. The wholesale price of eggs in the first quarter soared 40 percent from a year earlier, according to the Agriculture Department. Meanwhile, retail prices of countless food items, from cereal to sodas to salad dressing, are being nudged upward by more expensive ingredients such as corn syrup and cornstarch.
Rising food prices have given Congress and the White House a sudden case of legislative indigestion. In 2005, the Republican-led Congress and President Bush backed a bill that required widespread ethanol use in motor fuels.
Just four months ago… read on.
Topics: Agriculture, Biofuel, Energy, Ethanol, Prices, Trends |
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May 6th, 2008 at 11:34 pm
It’s driven by the high gas price. Very soon, we will see our food price increase as well. In North American, an increase in food price might not affect much on our life. However, in the third world country, a lot of people will not be able to effort the food cost increase. Make the food[eg. corn flour] out of reach for them.
The world will be in a more unbalance status.