Ethanol boom raises price of corn, U of M professor says
MINNEAPOLIS -- Americans who buy meat and those who raise livestock may pay for the current ethanol boom. "Consumers will pay most of the bill," said Vernon Eidman, a University of Minnesota professor known for his work on ethanol economic issues...
MINNEAPOLIS -- Americans who buy meat and those who raise livestock may pay for the current ethanol boom.
"Consumers will pay most of the bill," said Vernon Eidman, a University of Minnesota professor known for his work on ethanol economic issues.
Ethanol plants are sprouting up like the corn they use to produce the motor vehicle fuel. The demand for corn will be so high that it will force up the price of many grains used to feed livestock and, thus, the price of meat in grocery stores, Eidman said.
Retail poultry prices could jump more than 13 percent in the coming year, with smaller increases for other meat, he said in a Thursday speech to almost 100 agri-businessleaders.
Dave Bau, a university Extension Service educator, said earlier this week that Minnesota livestock producers are concerned because the price of corn, used to feed animals, is about 50 percent higher than a year ago.
The problem comes because ethanol, mixed with gasoline as a fuel, is becoming so popular that it is using up more corn.
In a speech to business leaders Tuesday, Worthington, Minn., agri-businessman Wayne Freese said there are 261 ethanol plants in operation, being constructed or announced. They could use more corn than U.S. farmers grow now.
Freese said wheat farmers and others are switching to corn to get in on the ethanol bandwagon. Eidman said that will cause shortages of other grains.
Gov. Tim Pawlenty promotes ethanol because "for the consumers and the environment, ethanol production is a good thing," spokesman Alex Carey said. However, if consumers or livestock producers are harmed, Carey said, the governor would look at what the state could do to help.
Eidman's comments were among the few that point to a negative impact of the ethanol boom.
Freese said corn producers should continue to see boom years through at least 2009, although he emphasized that conditions could change quickly.
"There is going to be an incentive, profitwise, to keep building ethanol plants" until corn prices rise too much, Eidman said.
Most ethanol plants are in the Midwest, although they also are sprouting up on the coasts, and corn is hauled in via rail.
The next step in ethanol is using other plant materials. Switch grass is the one most discussed, but a Little Falls, Minn.-area plant will use wood chips to produce the fuel.
Eidman said the nextgeneration ethanol plants probably won't be in production until 2015, leaving corn as the primary ingredient for years. Some predict that ethanol will use more than a quarter of the corn crop by 2011; it now consumes about 15 percent.