Ethanol and Food Prices

Ethanol has been blamed for both higher egg prices and higher milk prices recently due to higher costs for livestock feed.

AFBF Overall, the American Farm Bureau Federation reports that for the first quarter of this year, food prices are about four percent higher than the previous quarter. Farm Bureau’s regular market basket survey shows 12 of 16 basic grocery items are higher priced, including eggs, flour, bacon, pork chops, milk, potatoes, corn oil, mayonnaise, vegetable oil, ground chuck, sirloin tip roast, and toasted oat cereal.

Items lower in price compared to the end of last year were cheddar cheese, bread, chicken and apples.

It’s interesting to note that higher egg prices are blamed on ethanol while chicken prices are lower – and that higher milk prices are blamed on ethanol, but cheese prices are lower. It’s also interesting to note that red meat prices are higher compared to the last quarter of last year, but lower or the same compared to the same quarter last year.

Finally, Farm Bureau notes that the farmer’s share of the food dollar continues to decline. At this point, farmers and ranchers only receive about 22 cents out of every dollar spent on food – which means the rest goes to costs for transportation, manufacturing, retailers, etc. In other words, the middle men. Unlike most other business people, most farmers and ranchers are unable to set their own price for the commodities they produce and sell. They receive prices set by the buyers of the products. Even if their costs go up, they are unable to accordingly pass those costs on to the consumer. Therefore, most of the time, higher food prices go to the middle men, not the farmer.


0 responses to “Ethanol and Food Prices”

  1. SUGAR BEETS–This annual crop can be grown throughout most of US with or without irrigation. It is not a direct food crop for people and animals as is corn–except for derived refined white sugar that we should ingest less of. Despite its ease of conversion to ethanol, over 20% reduced land usage Vis a Vis corn, and decidedly lessened impact on ultimate human food prices; it has not been fairly evaluated as a feedstock for ethanol. Its components are–beet juice containing 17% sucrose and a byproduct–dried beet pulp solids–an animal feed.

    Benefits over corn-
    Lesser total impact on human and animal food costs.
    Providing another substantial market for beets could reduce need for 1.2 billion dollar government farm subsidy for refined sugar.
    Water and energy costs for milling corn and extracting and converting its starches (62% of kernel) to sugar are avoided as beet juice can be fermented directly to produce ethanol.
    Beets can yield the same amount of ethanol using over 20% less acres of farmland than corn. (527 gals vs. 411 gals/acre)