It ain't just chicken feed

Will cost of corn fuel a spike in grocery prices?

It's not easy being green.

Making fuel from corn may be a solution in part to U.S. dependence on foreign oil. But the federal government's push for ethanol production, along with its 51-cents-per-gallon subsidy for ethanol, has caused feed-corn prices to nearly double since January 2006.

Now around $3.90 a bushel, the price hike is a boon for corn farmers — but not for farmers who need it to feed their chickens, hogs, cattle and other livestock. They say their higher costs will likely translate to higher grocery-store prices for such things as steaks, chicken, bacon and eggs.

"We're paying double — the most that we've ever paid for corn in the 48 years we've been in business," said Lu Arnold of Lehi, a spokesman for the Utah Pork Producers and co-owner with her husband, Jon, of Arnold Hog Supply. "We'll have to raise the price of our pigs, and then prices will go up in the stores. We won't have anything to eat, but we'll all have gas in our cars."

Hog producers, she said, use about 10 percent of the nation's feed-corn crop. With the spike in prices, Arnold said she's glad her family is selling its Lehi farm, once the largest in the state with thousands of pigs. They are downsizing to a smaller operation in Moroni.

In this year's State of the Union address, President George W. Bush called for 35 billion gallons of renewable fuels per year by 2017. Other countries are turning crops into biofuel — sugar cane in Brazil and palm oil in Indonesia, for instance. In the United States, most of the ethanol plants are being built in the corn belt, with Iowa having the largest number.

The fuel-versus-feed issue is the biggest challenge facing chicken producers, according to Mark Hickman, chairman of the National Chicken Council. Corn makes up 65 percent of the average broiler chicken's diet, and broiler chickens and turkeys use nearly 12 percent of the U.S. feed-corn crop, according to the research and analysis firm, Agri Stats Inc.

"Basically, the corn that we want and need to feed our chickens is ending up in your fuel tank instead," said Hickman, speaking in Alabama last month at the NCC's annual food media seminar. "Companies are responding by passing along their higher feed costs to their customers when they can, and by producing fewer birds."

During the NCC seminar, Michael Donohue of Agri Stats said that before the ethanol boom, most of the corn crop was used for animal feed, high-fructose corn syrup (the key sweetener in soft drinks), industrial purposes and exports. (Feed corn is different from sweet corn, such as corn on the cob.) Now ethanol takes up about 25 percent of the U.S. crop.

Last year's corn harvest was the third largest in U.S. history, with 10.5 billion bushels. "But any shortfall in corn production, such as a drought, will cause difficulties across all sectors of agriculture and food production," said Donohue.

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