September 23, 2008

Tyson Foods Executive Blames Ethanol For Rising Food Prices

Richard Greubel, president of Tyson Foods’ international division, blamed ethanol for pushing up food prices in a recent news article.

The rising price of foods in local supermarkets is a direct result of Congress’ increased mandate for U. S. ethanol production, a Tyson Foods Inc. executive told University of Arkansas at Fort Smith students Monday.

He claims that ethanol production has caused corn prices to rise which will push up meat prices. And while it is true that corn prices have gone up in part because of ethanol production, any direct link is much harder to find.

It is also true that retail prices for chicken has gone up. According to the USDA Economic Research Service (ERS) the retail broiler composite has gone up from $1.674 per pound in August 2007 to $1.741 in August 2008. But the numbers that are most telling are the wholesale prices for the same time periods. The wholesale broiler composite went from $.814 per pound in August 2007 to $.719 in August 2008.

In other words producers at the lower end of the chicken supply chain are receiving less money in August of this year compared to last while at the retail level prices are higher. So the increased cost at the retail level that we were lead to believe was to cover rising feed costs isn't being passed down to the people actually buying the corn.

Note: According to this article the same thing appears to be happening in the pork industry as well.

Retail pork price in August were up 1.9 percent from July and up 2.9 percent from August of 2007. For January-August retail pork price were up 1.3 percent from a year earlier. Only the marketers benefited from the higher retail prices. The processor-retailer margin was up 1.8 percent and the packers' margin was up 8.6 percent from 12 months earlier. The producer’s average price for January-August was down 1.2 percent from 2007.


Anonymous said...

If you want to see a video about food shortages and enormous deforestation of tropical forests for feed corn in South America that is direct result of our ethanol production, look at "The Ethanol lie" on youtube or go to

Michael A. Gregory said...

I see on the website the land use studies that were published in Science magazine lat year as proof that ethanol is causing deforestation. I guess the proof that ethanol is causing food shortages is the Time opinion piece.

First the Searchinger study. Did you read this study? The results are highly dependent on the assumptions made. Did you notice that one of the assumptions that was made in the study was that we would be producing about 30 million gallons of ethanol per year? That is twice the level mandated in the RFS 2007. So when we reach basically 5 times the level of ethanol production of last year maybe the results of the study will be true.

With the Fargione study, another one of the authors was quoted in a article not long after the study was published and said that the study represented what could happen not what is happening.

Researcher Clarifies Study Results

Advanced Biofuels and Climate Change Information Center just posted that Bruce Dale reran both studies with two new assumptions, the use of no till farming and cover crops and it reduced the payback time to 2 years for grasslands and 14 years for forests. Like I said it all depends on the assumptions made.

And the one thing that I thought was interesting in both studies is that they didn't do any kind of life cycle analysis of petroleum. Wouldn't the strip mining occuring to recover tar sands cause land use changes as well?

As for food shortages caused by ethanol, as far as I can tell there is no less food on the market than there was a few years ago.

Is ethanol taking food out of peoples mouths?

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