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Tuesday, May 16, 2006

Environment - "Corn-as-fuel may help farmers, cost consumers"

The Indianapolis Star business writer, John Ketzenberger, provides an economics lesson today in his column, headed "Corn-as-fuel may help farmers, cost consumers." He writes:

Four ethanol plants are being built in the state; another nine are planned to produce the alternative fuel for cars and other vehicles.

But if demand for the fuel continues to drive up the price of corn, it could mean higher prices for everything from bacon to corn chips. ***

Hog farmers start to lose money when corn hits about $2.50 a bushel, Hurt said. They will thin their herds to save money, and that will reduce the supply available for bacon. It won't be long before the price of bacon rises. Since 60 percent of the state's corn now feeds cows, pigs, chickens and other livestock, any increase in the amount used for fuel will upset the balance that helps keep food prices low.

"We could have dramatic inflation for several years on meat, milk and eggs," [Christopher Hurt, a Purdue University agricultural economist] said. * * *

Then the question becomes how to balance the desire for corn as a fuel source versus its use as a food source. Since the state touts every new ethanol pump as an economic development coup, it's clear Hurt is one of the few giving this balance any consideration.

Note: Given the state administration's simultaneous push to blanket the state in CAFO's, including swine CAFO's housing five-figure populations of pigs, this may prove to be an example of burning the corn cob at both ends. (Re CAFOs and particularly swine CAFOs, see this story today in the Muncie Star-Press.)

Posted by Marcia Oddi on May 16, 2006 05:58 AM
Posted to Environment | Indiana economic development