Thursday February 01, 2007

As corn price rises, so could food bills

energybulletin.net -> kansas.com :

President Bush's State of the Union call for a sevenfold increase in ethanol production within a decade could have the unintended consequence of sparking corn shortages and driving up prices for a wide array of food products. Bush said he wanted 35 billion gallons of ethanol in the nation's fuel supply by 2017, and he proposed an ethanol subsidy of as much as $17.8 billion over a decade, as well as grants and loan guarantees. To meet Bush's goal, a substantial amount of corn that's now used to feed animals or make food products may be diverted to producing alternative fuels, and that worries cattle ranchers, hog farmers and poultry producers, who depend on feed corn to raise their animals.

As many as 79 ethanol plants are under construction in the United States and at least 111 are already operating. As more come on line, the demand for corn will surge. That's sparking a bidding war for corn that will mean higher food prices for consumers. As corn prices rise - they've climbed from about $2 a bushel in August to more than $4 a bushel today - the cost of beef, chicken and pork, along with related products such as eggs and milk, also rises.

In 2000, about 6% of the nation's corn harvest went to produce about 1.6 billion gallons of ethanol. Last year, 20% of the corn harvest was used to make 5 billion gallons of ethanol. When the ethanol plants under construction come on line by 2009, they'll have the capacity to produce 11.4 billion gallons, more than double last year's production. They'll need a lot more corn than is being planted now.

- Let's see. If 5 billion gallons of ethanol equals 20% of the corn harvest, then 35 billion gallons equals 140% of the corn harvest. Hmm. I'd suppose those Kellogg's Cornflakes are going to cost a lot more.

(2007-02-01 13:08:24 SGT) [Energy] Permalink

Most popular blog postings on lowem.log :

1. Singapore SIBOR interest rates fall to 1.5%, lowest since Dec 2004
2. 2009 Honda Global Small Hybrid details released : bigger than Jazz/Fit, smaller than Civic
3. Singapore : Inflation rate could push past 6% in Q1 2008
4. Singapore SIBOR rate fell to 1.25% in Apr 2008, lowest since Aug 2004
5. Fuel prices seen stoking Malaysia inflation in 2008
6. Singapore CPI inflation rate for May 2008 continues at 26-year high of 7.5%
7. Singapore CPI inflation hits 6.6% in Jan 2008 - a new 25-year record high
8. Singapore SIBOR rate falls to 1.31%, lowest since Nov 2004

Featured articles on lowem.log :

1. ABC Guide to Beating Inflation in Singapore and Elsewhere
2. Singapore inflation rate hits new 26-year high of 7.5% in Apr 2008
3. Hyper-inflation : early warning signs
4. Singapore hyperinflation warning signs #2 : Cooking oil price up 75%
5. Bread and inflation
6. Singapore M3 money supply growth vs STI stock index
7. Singapore SIBOR rate fell to 1.25% in Apr 2008, lowest since Aug 2004
8. Singapore : Inflation erodes away bank savings