Don't Blame Biofuels for High Chicken Prices

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It is ridiculous to assume that increased ethanol production has little effect on corn prices. At the end of the 07 crop year, over 2bn bushels of corn was used for ethanol production which equates to 19% of the total corn crop. The USDA predicts corn used for ethanol will rise to 1/3 of all corn production by 09/10 harvest. Now I agree that the price of wheat and soybean increased due to increased demand and a shortage in supply which follows simple supply/demand forces. However, with extremely high subsidies to produce ethanol the demand for corn will remain artificially high and prices will stay inflated.
In regards to food, sure fuel is an input for producers but the majority of the costs is related to feed, which is primarily corn. For example, feed for the largest chicken producer in the US consists nearly 40% of the cost to raise a chicken. The retail price of chicken has not risen due to oversupply but you can bet your whole chicken at your grocery store is going to go up in the near future.

Mike S. of MA 4:01PM September 05, 2008

The first comment seems logical, which is why this myth about biofuels causing food prices to go up is so pervasive. Corn ethanol is by no means perfect, but as a fuel it is a step in the right direction to lessen our oil consumption. It is actually marginally better in net fossil energy content than petroleum (because there is a 30% loss when producing and using petroleum) and the reason we use it at 10% in our fuels is NOT because it has less energy. It's because of auto warranty's which have not yet changed to allow higher percentages.
The corn lobby is easy to hate. No one likes pork barrel subsidies and the farm belt has been a large recipient of them over the years. But the oil industry is the king of subsidies and anyone who thinks fuel is a real market is naive. I would love to see all the direct and indirect subsidies to oil and all fuels get cut out, but then people would scream bloody murder about fuel costs. So alternatives need supports to level the playing field and compete as they build up scale.
Now as for food. The arguement that subsidies increase profits and therefore drive farmers to switch to the profitable crop is theoretically true, the problem is it hasn't worked that way here. The total acreage planted for corn this year went down in the US. If it's so profitable why did it do that? It's because the value of soy and other products for China and India is increasing rapidly. THAT is why food prices are going up. We've had nast droughts and weather in the US and elswhere which has taken out far more acreage than corn to fuels. And above all else, fuel costs for everything are pushing all prices higher. It is petroleum that is the problem, not the miniscule amount of biofuels we produce.
EIA found that if you got rid of ethanol, the resulting increase in gasoline prices would cause food costs to go up more than reduced ethanol production caused them to go down. This is because fuel prices play a MUCH larger role in food costs. Oxfam, GMA, all these food groups should be pointing the finger at our failed energy policy and oil, not biofuels.
Finally, people need to wake up and realize that not all ethanol is created equal. Next generation biofuels are on their way thanks to the market that was created by corn ethanol. Several companies are already in plant building phases that produce much lower carbon ethanol from feedstocks that don't compete with food crops (waste products, etc). A rush to judgement on biofuels will just throw the baby out with the bathwater, and that's frankly what the oil industry hopes... because all we'll be left with then is oil, and an investment community too burned to invest in other alternatives. There are plenty of better biofuels coming, and corn ethanol is hardly the villain it is being made out to be. Afterall, we're not dropping bombs because of ethanol...

of CA 9:27PM June 27, 2008

I don't blame the rising price of chicken on corn-based Ethanol. I blame the rising price of corn on corn-based Ethanol. And chicken prices are, in PART, effected by the price to FEED the things, which is based, in part, on corn prices, which are higher. Fuel prices are behind the majority of the spiking in the prices of most foods (except corn), and Ethanol has done nothing to help lower those prices. If anything, they add to them.
We should NOT be using food to make fuel. Why are these folks so interested in defending their crop? Money, of course. It's one of the most heavily subsidized crops on the face of the planet, making it a cash cow for the farmers. I do understand the desire to make money. But when it comes at the expense of rising food prices, one would think they'd have the sense to STOP growing fuel corn and start growing food corn. They don't because the subsidized cost of growing of fuel corn produces substantially greater profit than food corn.
Subsidies skew the market for various crops by manipulating the costs involved in growing it. The more it's subsidized, the less the cost of growing it and the greater the profit. So more people grow the more profitable crop. This makes the rest of the unsubsidized crops less attractive to grow. Less is therefore grown. But demand is the same (or growing) so the prices of the unsubsidized crops go up to offset the lower profit margins. To solve this problem, you stop the subsidies and let demand alone dictate costs and profits.
I'll bet they scream bloody murder about THAT as well.
The really sad part is that Ethanol is NOT a viable bio-fuel option. In addition to skewing the food market prices, it's CARBON-BASED. It isn't any more of a carbon-free fuel than oil-based products. It takes 6 barrels of oil to produce 7 barrels of corn-based Ethanol. Corn-based ethanol has only 66% of the energy of a gallon of gas, which is why it's mixed with gas, rather than burnt as a fuel all by itself. As a way to stretch gas, aside from the fact food prices are going to get all messed up, it isn't appropriate for even a stop-gap measure, since it has to be mixed with gas in order to provide a nearly equivalent amount of energy. Gas is both a carbon-based and finite resource and is expected to only go up in price (aside from infrequent and small dips) over the next five years.
Let the farmers go back to growing corn for FOOD. Let's find something other than a carbon-based alternative for fuels. I mean, if we're going to change the whole base of our fuels from gas, why bother switching to something we already know isn't going to help the planet at the same time?

Fatesrider of CA 6:31PM June 26, 2008