Demand for corn-based ethanol fouls up chicken production

US - Weaning the United States from oil is creating quite a stir down on the farm.
calendar icon 4 April 2007
clock icon 3 minute read
The ethanol boom is driving up demand for corn, doubling prices and hurting chicken farmers who use corn for feed.

Ethanol, a supplement to gasoline now found in pumps across the country, has become a major consumer of corn, devouring 20 percent of the United States' production.

Across the country, that boom is driving up demand for corn, doubling prices and hurting chicken farmers who use it for feed but helping vegetable farmers who are planting more of it in hopes of cashing in.

As a result of the rising prices, production by the U.S. poultry industry is expected to decline for the first time in 30 years, albeit only 1 percent. And Delaware's $844 million poultry industry, responsible for 70 percent of the state's farm income, is also expected to cut back on production.

"When you are having difficulty covering the cost, the only thing you can do is throttle back production," said Richard Lobb, spokesman for the National Chicken Council, which represents most U.S. poultry companies.

That is likely to result in higher prices for consumers, poultry companies and economists say. Prices at the wholesale level, which eventually trickle down to consumers, rose 27 percent from early 2006 to 2007.

Poultry growers who supply major chicken companies expect their income will drop as much as 20 percent this year as the companies they sell to cut production.

The poultry industry was already reeling from overproduction. Last fall, with prices low and too much chicken - both domestic and foreign - on the market, companies cut back.

"Like the rest of the industry, we did cut back ... about 2 or 3 percent," said Julie DeYoung, spokeswoman for Perdue. "We produce to customer demand."


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