WSJ.com – May 21, 2007
There is a much greater demand for corn with the increased demand for ethanol. This demand has had a dramatic impact on the cost of corn and has made it too expensive for some ranchers to use corn to feed their livestock. Instead, they appear to be using over-supply of food that is traditionally used for humans.
This, of course, begs the question as to the USA’s ability to effectively produce ethanol. If we are using our food to power our cars will that significantly hurt the poorest people in our nation, not to mention our exports to foreign lands that are impoverished.
Mr. Smith is just happy his pigs aren’t eating him out of house and home. Growing demand for corn-based ethanol, a biofuel that has surged in popularity over the past year, has pushed up the price of corn, Mr. Smith’s main feed, to near-record levels. Because feed represents farms’ biggest single cost in raising animals, farmers are serving them a lot of people food, since it can be cheaper.
Other businesses called “jobbers” serve as middlemen, buying food that manufacturers would otherwise throw away, like burned or broken cookies, or cereal that contains too much sugar, and selling it to livestock operations. At Midwest Ingredients Inc. in Princeville, Ill., manager Ruthi Coats says more farmers are coming to her because, rather than feed corn they grow to livestock, they want to sell it on the market for those big prices.
Ideally, livestock producers like to feed their pigs and cattle a mixture consisting of about 70% corn, plus soybean meal, fat and vitamins. Corn provides protein, essential nutrients and amino acids that give animals energy and fatten them up. Historically, the livestock industry has consumed 60% of the nation’s corn crop.
Thanks to the ethanol rush, the price of a bushel of corn for months has hovered around $4 — nearly double the price of a few years ago. That has prompted livestock groups like the National Cattlemen’s Beef Association and the National Chicken Council to call for an end to federal ethanol subsidies, including a 51-cent-per-gallon tax credit offered to companies that blend gasoline with ethanol. For now, livestock must pay up or make do with alternatives.
Near the Snake River in Idaho, Cevin Jones of Intermountain Beef is struggling to feed his 12,000 cattle in light of higher feed costs. Traditionally, he has used up to 30% corn or other grains in his feed mix. This year he’s using 100% byproducts, including french fries, Tater Tots and potato peels. “It’s kind of funny,” Mr. Jones says, “every once in a while, you can spot a couple of cattle fighting over a whole potato.”
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