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

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