Nashville, Tenn., March 11, 2008 – U.S. ethanol policy is continuing to drive meat and poultry prices higher, according to preliminary results of an analysis by expert economist Tom Elam, Ph.D., president of Farm Econ. Elam offered a preview of his soon-to-be-released study at the Annual Meat Conference, March 9-11, 2008, in Nashville, Tenn.
Elam said that he estimates the
cumulative costs to the food industry of the
renewable fuel program will be about $100
billion from 2005-2010. The program mandates
minimum ethanol production and provides tax
incentives for ethanol use.
As part of his analysis, Elam compared
what would have happened without the federal
biofuels program with what has happened. Among
his key findings:
• Farm level corn prices in 2008
would have averaged about $2.77 per bushel
without the program. Ethanol tax credits have
added $1.33 per bushel, and may drive corn more
than $5 a bushel in 2009.
• Without the biofuels program, Elam
estimates that 2008 ethanol production would
have been 4.5 billion gallons, but the program
has added at least 4.2 billion gallons.
• Ethanol would have been $1.69 a
gallon, but increased demand for corn and
higher corn prices are driving ethanol prices
up and they now are 51 cents a gallon higher
than they would have been without the program.
• Approximately 76 million acres of
corn would have been harvested in 2007, but the
program added 10.5 million acres.
• The biofuels program is, in effect,
a regressive tax on food production. The
windfall gains from the program go to a
relatively small number of corn and soybean
producers who were already better off than the
Elam also detailed the direct impact of
increased input costs on the meat and poultry
industry and on consumers themselves. Among his
• As a result of the program this
year’s costs to the broiler industry are up
$3.4 billion; turkey input costs are up $646
million; swine input costs are up $2.9 billion;
cattle input costs are up $2.24 billion; and
dairy producer input costs are up $2.7 billion.
• Translated into a cost per animal,
Elam estimated the costs at 53 cents per
chicken; $3.40 per turkey; $38 per hog and
$117.50 per fed beef animal.
“You cannot use the combined grain
crops of Australia and Indonesia for U.S. fuel
and not have an impact on corn, soybean and
food prices,” Elam said. He said he expects
food price inflation to rise five or six
percent in 2009.
He predicted that consumers, especially
lower income consumers, will downgrade the cuts
of meat they purchase and pay more attention to
generics. “People will shop more
carefully,” he said.
For more information, go to: http://www.balancedfoodandfuel-old.org.
Expert Economist Says National Ethanol Policy Continuing to Drive Meat and Poultry Prices HigherTuesday, March 11, 2008
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