Government at the Wheel

While on the topic of the wheel, let’s talk about the illogic of ethanol production. Ethanol is made from corn and added to our gasoline on the premise that it burns more cleanly than fossil fuels, reduces our dependence on imported oil and can help us reduce our carbon footprint. I guess that’s the logic. But when you pull the covers back, a different story appears.

The fossil fuel savings is questionable. We may burn as much oil and gas to produce corn on the farm or ethanol at the chemical plant as we save by adding it to our gasoline.  If you consider the vast amount of pollution caused by the EPA-exempt farm, the fertilizers flowing into our rivers and streams and then the Gulf, the Atlantic, or the Pacific, we may be enlarging our carbon footprint. Corn likes nitrogen, nitrogen eats oxygen, and so we have the dead zone in the Gulf that is the size of Rhode Island. And that doesn’t count the air pollution from the diesel fuel it takes to run the tractor to farm it or the semi to transport it. Environmental degradation on land, sea and air. Despite those questions, our government raised the ethanol mandate for ethanol production in the 2006 farm bill while subsidizing the farmers who grow the corn. More tax costs to you. The EPA recently announced that it was raising the percent of ethanol in your gasoline from 10 to 15%.  Fuel prices will go up at your local station.

There’s more — because beef, pork and chicken production at the CAFO houses depends on corn almost exclusively, and corn as food is being displaced by corn as fuel, the government predicts even more price rises at the store. Pork is up 34%, poultry 15%, beef 14%. And it will only go higher.

And you thought Real Food was expensive? 

The Boomerang

Beef prices are up as much as 20%, prefacing a rise at the grocery store. Pork and chicken are on a similar trend. Two reasons: the decision to turn corn into ethanol has raised the price of corn to the feedlots, bumping the price of beef which eats almost nothing but for their 6 to 9  months in the lots; as a result, ranchers began thinning their herds because the packers were taking the increase in the downstream costs out on the producers, as usual; so the stockmen took the unusual step of selling their heifers and mature mother cows to market rather than using them to re-stock their herd. The trend finally caught up with the packers – a smaller herd to bid on, higher prices to the rancher. Just desserts for the oligopolists. They were pushing down so hard on the ranchers that they forced a market reaction that has back-fired on them. Fewer calves to bid on, real competition on price, good for the stockmen. Let the packers eat cake, I say.

The feedlots and packers are taking it on the chin with this double whammy of high grain prices and fewer cattle to bid on. The average consumer is the ultimate one to suffer — higher prices for meat and fish at the grocery.

The good news? Our price is staying the same. We aren’t dictated to by the oligopolists and you’re not either. Sometimes the little guy wins. It’s a good thing.