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How Ethanol Helps Boost Meat Prices

khao's picture


The meat prices are going higher. But do you know that ethanol helps boost meat prizes? How???


The production of corn in U.S. is quite high. However, even one third of the corn is not used in our cereals and cow feed —– instead it is used as fuel to drive our vehicles.


We all are quite aware of the fact that corn is mostly used to feed livestock. Now since the prices of the corn are rapidly going high, the farmers are paying high prices to feed the cattle. And thus, the meat prices are getting affected.


 


So far, the livestock industry has been the biggest to purchase the cheap and abundant corn. But since the introduction of ethanol mandate in the year 2005, large supply of corn goes towards the production of this renewable fuel.


 


 


Corn production for ethanol has increased radically over the last five years, from about 1.6 billion bushels in 2005-2006 to almost 3.7 billion bushels in 2008-2009. The percentage of corn used for ethanol grew in that 2008-2009 from 9.5 % of the total yield to 22 % in 2009-2010.


Though, the meat prices always shoot up during the festive seasons, this year the rise in meat prices occured much in advance.


As per the USDA data, meat is costlier by 12% when compared to last year. Ethanol mandate has stimulated the cost of corn at least 1.5 percent, and the effect on meat prices is considerably greater.


With corn prices  related to the oil prices, in future when the price of gas will rise, the demand for ethanol will shoot and then we’ll certainly have to think at two places — before refilling gas and eating.


Image Courtesy: deltaflow.com

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