Saturday, April 30, 2011

WSJ: Ethanol policies assure food prices will stay high for a long time

It's Getting Harder to Bring Home the Bacon 4/30/11

CEO of the world's largest pork producer explains why food prices are rising and why they are likely to stay high for a long time 

Excerpt: Some "60 to 70% of the cost of raising a hog is tied up in the grains," Mr. Pope explains. "The major ingredient is corn, and the secondary ingredient is soybean meal." Over the last several years, "the cost of corn has gone from a base of $2.40 a bushel to today at $7.40 a bushel, nearly triple what it was just a few years ago." Which means every product that uses corn has risen, too—including everything from "cereal to soft drinks" and more.

What triggered the upswing? In part: ethanol. President George W. Bush "came forward with—what do you call?—the edict that we were going to mandate 36 billion gallons of alternative fuels" by 2022, of which corn-based ethanol is "a substantial part." Companies that blend ethanol into fuel get a $5 billion annual tax credit, and there's a tariff to keep foreign producers out of the U.S. market. Now 40% of the corn crop is "directed to ethanol, which equals the amount that's going into livestock food," Mr. Pope calculates.

Related: Ethanol on the run - Ethanol is "fiscally indefensible" and "environmentally unwise"
Survival of the Fattest 
EPA: Ethanol harms air quality but we’re mandating it anyway 
Other posts on ethanol 

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