Ethanol demand raises feed costs, but effect on groceries not direct

US - 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 in an interview last week
calendar icon 18 December 2006
clock icon 2 minute read

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 of corn above $3 a bushel, the highest level in more than a decade.

That is bound to have an effect on farms and ranches, Johanns said. "My best projection is that for a couple of years here, you are going to have a tug and pull between various industries," Johanns said.

Because so many factors go into making food, consumers probably will not see a direct effect, 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. "There's just too many factors that can impact the price, both up and down."

There will not be less corn for people to eat — field corn for livestock and fuel is different from sweet corn, the source of corn on the cob and canned or frozen corn.

Chicken companies are hoping to pass at least some of the high feed costs on to shoppers, despite resistance from supermarkets and fast-food chains, said Richard Lobb, spokesman for the National Chicken Council.

Source: Houston Chronicle

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