As demand from ethanol production increases, soaring corn prices are pushing costs up in the food industry and this will result in increased prices for consumers, industry representatives told Congress yesterday (8 March).
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Rising corn prices have particularly hit the margins of meat and poultry producers where the cost of feed has risen 40% in recent months, National Chicken Council spokesperson Matthew Herman of Tyson Foods told the livestock, dairy and poultry subcommittee of the House Agriculture Committee.
Herman cited forecasts by Dr. Bruce Babcock, an economist at Iowa State University, on the impact of the corn prices on the poultry industry. According to Babcock, the rate of growth of production has slowed, which will allow wholesale prices to rise to cover the increase in feed costs, which will eventually be reflected in higher retail prices.
The US, Herman warned, could face a shortage of its most abundant crop – corn – as federal subsidies and mandates drive ethanol production.
Increasing domestic production of energy is a “very worthy goal,” but one that must be pursued in a “reasonable and rational way,” Herman said.
“The current approach and pace is full of risks to traditional users of feedgrains,” he warned. “Without adequate safeguards for the unintended consequences, the future of US animal agriculture is put in great jeopardy,” Herman concluded.
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