Corn Demand for Ethanol Results in Higher Beef, Pork, & Chicken Prices
The USDA reported last week that the ethanol industry’s corn demand is raising livestock costs and will result in increased beef, pork and chicken prices.
The USDA also reports that ethanol is consuming 20% of last year’s corn crop and is expected to use 25% of this year’s harvest, driving up the price of corn. The average price of corn is $3.20 a bushel, which is $2 up from last year.
Higher feed costs will reduce meat and poultry production. The National Chicken Council reported that the price of corn has forced a 40% increase in the cost of feeding chickens, and poultry will soon cost more at retail.
Deputy Agriculture Secretary Chuck Conner said USDA is closely monitoring corn supply and demand, which is likely to force farmers to plant more acres of the crop: “We do have confidence in the marketplace’s ability to react. We believe producers are seeing the market saying, ‘I need more corn, not only for ethanol, but for our feed needs in this country.”
The USDA announced that a mere 4.1 million acres will be withdrawn from the Conservation Reserve Program in the next four years, ruling out the possibility that it be used for extra corn production. The CRP program pays landowners to take out of production land that is highly erodible or otherwise environmentally sensitive.
Meanwhile, USDA — urged by NCC, the National Pork Producers Council, American Meat Institute, National Turkey Federation, National Cattlemen’s Beef Association, and National Milk Producers Federation — has formed an ethanol panel to address the effects of ethanol and other biofuels on animal agriculture.