Price Of Ethanol

Cow-calf returns: before and after ethanol

A new study from researchers at Texas A&M’s Agricultural and Food Policy Center and Doane Advisory Service indicates cow-calf returns have improved since 2007, when government mandates spurred a large increase in the amount of corn used for ethanol production.  The report, titled “Economic comparisons of input price changes on representative livestock operations before and after the Energy Independence and Security Act of 2007,” is available online from the National Corn Growers Association .

For full disclosure, Doane Advisory Service is a division of Vance Publishing Corporation, the parent company of Drovers/CattleNetwork.

In their analysis, the researchers used data from the Food and Agricultural Policy Institute (FAPRI) to compare 2007 and 2011 baselines for input prices for cow-calf and dairy producers in representative regions of the United States. These baselines project prices out to 2016.

Not surprisingly, the 2011 baseline projects significantly higher prices for all inputs, and for cattle prices, compared with the 2007 baseline covering the same period of years. In the 2007 baseline, corn prices ranged from $2.99 to $3.25 per bushel. Under the January 2011 baseline, corn prices ranged from $3.55 to $5.32 per bushel, with the average 2012 to 2016 price projected at $4.74 per bushel.

Cattle prices also have moved higher than most analysts would have expected in 2007. The report says that over the 2010 to 2016 period the January 2011 baseline projected feeder cattle prices were 27 to 37 percent higher than the 2007 Baseline prices for the same period.

The authors also note that the2011 baseline shows considerably higher annual inflation than the 2007 baseline for other farm inputs including fertilizer, herbicides, insecticides, fuel, lube and taxes.

For research purposes, Texas A&M’s Agricultural and Food Policy Center develops simulations of representative farms in key production areas, based on local production environments, prices, etc. For this study, the researchers used simulated beef-cattle ranches in Florida, Missouri, Nevada, South Dakota, Texas and Wyoming.

The report shows total costs of production per head increased for all of the ranches from the 2007 baseline to the 2011 baseline. Increases in the cost of crop and feed production varied considerably between regions. On the simulated South Dakota ranch, for example, crop and feed production for 2011 was listed at $52.65 per cow in the 2007 baseline and $53.29 in the 2011 baseline. For the Texas ranch model however, crop and feed production for 2011 increased from $128.67 per cow in the 2007 baseline to $157.46 in the 2011 baseline.

Corn-Based Ethanol's – Main Cause of Rising Meat & Poultry Prices ...

The connection between rising food prices and federal support for corn-based ethanol is explained in a new website launched today by organizations whose members produce and process the majority of meat and poultry in the United States.

Food prices are up – meat and poultry prices specifically are up 8.5 percent from a year ago – and many consumers are asking why. According to the new website, the government’s federal subsidies for corn-based ethanol are key contributors. About 40 percent of the U.S. corn crop is now devoted to ethanol production, because nearly all ethanol produced in this country is derived from corn. This increase in corn demand drives its cost higher, putting tremendous pressure on the livestock and poultry industries that traditionally have been major users of corn as feed. Corn prices have roughly tripled since the government in 2006 mandated ethanol be blended into gasoline and the Consumer Price Index for meat and poultry has risen steadily with it.

The new website outlines for consumers how these rising corn prices have contributed to increased meat and poultry costs at the grocery store and asks them for their help in ending federal support of the corn-based ethanol industry, by signing a petition that states: “Federal energy policies need to move beyond corn-based ethanol and look for the next generation of alternative fuels that don’t pit food, feed and fuel needs against each other.”

The site is sponsored by the American Meat Institute (AMI), National Chicken Council (NCC), National Meat Association (NMA) and National Turkey Federation (NTF).

“When consumers see the ‘Contains Ethanol’ sticker at the gas pump, many don’t realize the connection between the sticker and their grocery bills,” said AMI President and CEO J. Patrick Boyle. “This new website aims to provide the facts and allow consumers to raise objections to this policy in an online petition. It also offers tips on stretching your meat and poultry dollar.”

“The policies and rules of the game for corn-based ethanol must be re-balanced and the playing field must be leveled to permit chicken producers and other animal agriculture producers to more fairly compete for the very limited supplies of corn this year and most likely for the next few years,” noted NCC President Mike Brown. “Chicken companies and all of animal agriculture are bearing the burden and feeling the disastrous effects of competing for corn on a field that is heavily tilted toward the ethanol industry,” he said, adding that some companies have been forced to limit production and lay off workers due to the high cost of corn.

Impact of Ethanol Use on Food Prices and Greenhouse-Gas Emissions

Handbook of Bioenergy Economics and Policy

The Economic Impact of the Demand for Ethanol

The Economic Impact of Public Support to Agriculture, An International Perspective

Effects of Increased Biofuels on the U. S. Economy In 2022