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AMI Op Ed: Corn ethanol: Burning up food budgets

Wednesday, April 20, 2011

(American Meat Institute)

“While Nebraskans are closely watching gas prices escalate at the pump, they are also starting to see something else eating away at their budgets: rising food costs,” says AMI President and CEO J. Patrick Boyle in a guest editorial published today in the Lincoln Journal Star

Boyle notes that according to March's Consumer Price Index (CPI), the general "at home" food category has risen 3.6 percent over the past year and retail meat prices are climbing even higher. Beef and veal prices rose 12.2 percent higher than March 2010, the largest year-over-year increase in the beef and veal CPI since September 2004. Retail pork prices rose 11.2 percent from last year's level.

“While food prices are nudged upwards by some factors beyond our control --  like floods, droughts and growing middle class demand in developing countries -- there is one underlying domestic factor that we can control: burning our food and feed in our gas tanks,” Boyle adds. 

Boyle goes on to explain that fuel blenders are obligated under a federal mandate to combine a certain amount of eligible biofuels into the gasoline they sell and they rely almost exclusively on ethanol derived from corn. And although its production is already mandated, the blenders receive a tax credit for incentive, at the expense of the American taxpayer, of 45 cents per gallon of ethanol they produce.

Because of the ethanol mandate and subsidies, demand for corn and in turn its price, has skyrocketed.  Some analysts expect prices could top $8 a bushel this spring.

This puts tremendous pressure on the meat and poultry supply, where corn is an important part -- and in some cases the largest part -- of the diets of animals produced for food like chickens, turkeys, cattle and pigs.

Boyle explains, “…with corn being so expensive, it is more difficult for many farmers and ranchers to remain profitable and continue feeding their livestock. Unable to afford feed, farmers and ranchers are reducing the number of animals they are raising or are ceasing raising livestock altogether…which means fewer animals for the meat supply.  This is Economics 101 -- as the supply of meat shrinks, the price goes up at the local grocery store.”

“It's in all of our best interests to develop alternatives to gasoline as fuel for our cars. But the Obama administration and Congress need to focus on fuel sources that do not compete with our food and feed and should support proposals that aim to limit federal support of corn ethanol,” Boyle concluded.

“In the meantime, when Nebraskans see a "May Contain Up to 10% Ethanol" sign at the gas pump, they need to realize that their grocery bill contains ethanol, too, in the form of higher food prices.”

To view the op ed in its entirety, visit: http://journalstar.com/news/opinion/editorial/columnists/article_398b24b0-b3ca-5173-9130-071e92572c0f.html.

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