Expect the price of beef, pork, chicken and a host of other goods to go up if the House energy bill becomes law. But the trade-off may be worth it.
Steve Hargreaves – CNNMoney – Dec. 7, 2007
Although our foodstuff price increases will be moderate, a price increase is guaranteed with Ethanol mandates. -- Ed.
NEW YORK -- If a recently passed House bill mandating a 7-fold increase in biofuels becomes law, there's little doubt food prices will rise.
The question is by how much, and is the trade-off worth it?
On Thursday the House, as part of a larger energy package, passed a bill mandating the increased use of biofuels - fuel from ethanol and other plant matter largely used to power vehicles - from current levels of about 6 billion gallons a year to 36 billion gallons a year by 2022.
The move is supported by environmentalists, who say biofuels generate about 20 percent less greenhouse gasses than fossil-based fuels like gasoline. Corn farmers and the ethanol industry are obviously on board.
The bill also has the support of those what want to reduce U.S. oil consumption. Over 60 percent of the country's oil is imported - mostly from Canada, Mexico and Venezuela. That 36 billion gallons of biofuel could replace roughly 25 percent of the nation's current gasoline consumption of about 140 billion gallons a year.
But it's clear the biofuels mandate, which calls for 15 billion gallons a year of corn-based ethanol and another 21 billion gallons from "advanced biofuels" that use other plants besides food crops, will drive up the price of corn.
With it, the price of other corn-dependent products like chicken, pork, or items that use corn syrup, like soda, which have already seen an increase, are likely to rise further.
Karen Batra, a spokeswoman for the National Cattleman's Beef Association, said that corn prices are already up 21 percent this year. "The ranchers are already taking a hit." … [Read More]