xcel
12-15-2006, 03:53 PM
This transition from corn to ethanol byproducts probably amounts to the biggest structural change in the cattle-feeding business in at least 50 years. (http://www.usatoday.com/money/industries/food/2006-12-14-ethanol_x.htm)
http://www.cleanmpg.com/photos/data/501/Farmer_checking_crop.jpgAP - Dec. 14, 2006
WASHINGTON - Soaring corn prices are squeezing meat and milk producers, but consumers will not necessarily see higher prices at the grocery checkout, Agriculture Secretary Mike Johanns said Thursday.
Costly corn has made it more expensive to feed cows, chickens and pigs. Demand for ethanol, a fuel made from corn, has pushed the price above $3 a bushel, the highest in more than a decade.
"My best projection is that for a couple of years here, you are going to have a tug-and-pull between various industries," Johanns told the Associated Press.
Because so many factors go into making food, consumers probably will not see a direct impact, he said.
"I just would hesitate to pick any item at any one time and say to the consumer, 'It's the fault of this item that you're going to be paying a higher price,' " Johanns said. Too many factors can affect the price, he said.
But chicken companies are hoping to pass at least some of the high feed costs to shoppers, despite resistance from supermarkets and fast-food chains, said Richard Lobb, spokesman for the National Chicken Council. "It's very competitive. We don't have the kind of captive market that some interests do," he said. "We have to compete with pork and beef, for example. If they're not going up, it's hard to raise chicken prices."
Ethanol doesn't take all the corn. Corn kernels minus the starch are left over and can be fed to livestock, primarily to beef cattle. Still, the shake-up in the corn market has the beef industry reeling, said Gregg Doud, National Cattlemen's Beef Association chief economist.
"This transition from corn to ethanol byproducts probably amounts to the biggest structural change in the cattle-feeding business in at least 50 years," Doud said.
The industry is struggling to figure out how to transport huge quantities of these byproducts, instead of corn, to the Texas Panhandle and southwest Kansas, where most cattle are fed, Doud said.
But it is chicken and milk prices that might rise very slightly in the coming year, because of higher feed costs as well as cutbacks in production, said Keith Collins, USAD's chief economist. "Surely we see that higher feed costs, over time, ought to be factored into higher retail meat costs," he said.
"The effects are going to depend on how the ethanol story plays out over the next two years," Collins said. "It's going to be a function of how much more readily can we attract more land into corn production, what kind of corn yields we see, what kind of global demand will there be for corn. There are a lot of variables."
Johanns said another important factor is an effort to develop crops besides corn, such as switchgrass, that can be converted to ethanol.
"The marketplace does adjust," Johanns said. "Sometimes, it does take time."
http://www.cleanmpg.com/photos/data/501/Farmer_checking_crop.jpgAP - Dec. 14, 2006
WASHINGTON - Soaring corn prices are squeezing meat and milk producers, but consumers will not necessarily see higher prices at the grocery checkout, Agriculture Secretary Mike Johanns said Thursday.
Costly corn has made it more expensive to feed cows, chickens and pigs. Demand for ethanol, a fuel made from corn, has pushed the price above $3 a bushel, the highest in more than a decade.
"My best projection is that for a couple of years here, you are going to have a tug-and-pull between various industries," Johanns told the Associated Press.
Because so many factors go into making food, consumers probably will not see a direct impact, he said.
"I just would hesitate to pick any item at any one time and say to the consumer, 'It's the fault of this item that you're going to be paying a higher price,' " Johanns said. Too many factors can affect the price, he said.
But chicken companies are hoping to pass at least some of the high feed costs to shoppers, despite resistance from supermarkets and fast-food chains, said Richard Lobb, spokesman for the National Chicken Council. "It's very competitive. We don't have the kind of captive market that some interests do," he said. "We have to compete with pork and beef, for example. If they're not going up, it's hard to raise chicken prices."
Ethanol doesn't take all the corn. Corn kernels minus the starch are left over and can be fed to livestock, primarily to beef cattle. Still, the shake-up in the corn market has the beef industry reeling, said Gregg Doud, National Cattlemen's Beef Association chief economist.
"This transition from corn to ethanol byproducts probably amounts to the biggest structural change in the cattle-feeding business in at least 50 years," Doud said.
The industry is struggling to figure out how to transport huge quantities of these byproducts, instead of corn, to the Texas Panhandle and southwest Kansas, where most cattle are fed, Doud said.
But it is chicken and milk prices that might rise very slightly in the coming year, because of higher feed costs as well as cutbacks in production, said Keith Collins, USAD's chief economist. "Surely we see that higher feed costs, over time, ought to be factored into higher retail meat costs," he said.
"The effects are going to depend on how the ethanol story plays out over the next two years," Collins said. "It's going to be a function of how much more readily can we attract more land into corn production, what kind of corn yields we see, what kind of global demand will there be for corn. There are a lot of variables."
Johanns said another important factor is an effort to develop crops besides corn, such as switchgrass, that can be converted to ethanol.
"The marketplace does adjust," Johanns said. "Sometimes, it does take time."