The US Department of Agriculture has said that meat supply will fall this year because of the high cost of feed. Output of beef, pork and chicken is expected to decline by $2.4billion as farmers react to the soaring cost of feeding livestock.
Meat production in the US rises by about 2 per cent a year, but the pressure from American ethanol producers manufacturing fuel from corn has sent the price of maize soaring to $US4 ($4.80) a bushel.
The Department of Agriculture is predicting last year’s corn crop will sell for an average of $US3.10 a bushel at the farm gate, the highest for a decade.
Faced with extortionate feed costs, cattle and poultry farmers are rearing fewer animals and slaughtering them early. That means a sudden reversal in the annual meat production gain, representing a fall of 0.8kg per person.
“There is a new demand component,” said Shayle Shagam, a livestock analyst at the department. “Livestock producers have to bid against the ethanol industry to get supplies of corn.”
The biofuel revolution’s negative consequence was first felt south of the Rio Grande, when the escalating price of corn affected a food staple. Mexico’s tortilla inflation crisis is spreading north to the heartland of rib-eye steak and chicken wings.
The Department of Agriculture predicts that food prices will rise by up to 3.5 per cent this year as farmers rein in output in response to feedstock costs.
In Washington, the International Monetary Fund added its warning about the consequences of a mass conversion of food crops into fuel. Mounting political panic over carbon emissions has encouraged politicians in Europe andthe US to raise targets for the biofuel content in a litre of petrol.
Food prices rose by 10 per cent worldwide last year, said the IMF in its World Economic Report, owing to a surge in corn, wheat and soybean prices.
The pressure on prices will increase, says the IMF. The EU’s target of a minimum biofuel content of 10 per cent will require 18 per cent of agricultural land to be set aside for road fuel production.
Corn is a vital component of the human food chain, used as cornmeal for baking bread and tortillas, as cooking oil and corn syrup in processed foods and as animal feedstock. Vast US government subsidies for the production of ethanol, used as a petrol additive in the US, has encouraged the expansion of ethanol distilleries.
Economists C. Ford Runge and Benjamin Senauer of the University of Minnesota in February found that the number of hungry people worldwide could grow by more than 50 per cent by 2020 as corn, sugar and other food staples were increasingly devoted to making fuel.
The same trend would bring much higher food prices to the developed world, the economists predicted.
Corn and ethanol producers dispute the claims.
Extracted in full from: https://www.theaustralian.com.au/news/world/biofuels-power-food-price-increase/news-story/7df68a6ec34cf07239454b66bc78dc16
