Wednesday, May 23, 2007

trail mix, cheese curls, tater tots and pigs

A handful of banana chips, yogurt-covered raisins, dried papaya and cashews sounds like a tasty afternoon snack. Some people get a pretty good price per pound on trail mix if they buy the one-ton box.

Monday’s Wall Street Journal had a front-page article explaining how farmers are feeding their pigs trail mix, cheese curls, tater tots, broken cookies and other surplus products from food processors. Why? Federal legislation requiring bioethanol use in gasoline has caused the price of corn to double. One farmer saves $8 per ton on feed costs switching away from corn. This works out to $40,000 per year saved. Plus, the pigs like sweets (1).

Corn farmers are ecstatic about doubling prices but other farmers raising chickens, turkeys, heifers, and pigs, as well as those who milk cows and anyone in the food processing industry, are not pleased (2).

This past year there were demonstrations in Mexico protesting the steep rise in the price of tortillas, a local food staple. Of course, the cause was the rise in the world price of corn caused by the U.S. ethanol-from-corn fetish. What is so crazy about this is that ethanol from corn produces only 1.3 times the energy it costs to produce. Sugar cane produces ethanol with as much as 10 times the energy used to produce it (3).

Unfortunately we don’t grow much cane in Iowa.

I study economic development. As I often tell my students, few nations in the world are rich enough to get away with such insane policies.

Is this a great country or what?

Be blessed.

(1) “With Corn Prices Rising, Pigs Switch to Fatty Snacks,” The Wall Street Journal, 21 May 2007, p. A1.
(2) “Ethanol's Bitter Taste,” The Wall Street Journal, 18 May 2007, p. A16.
(3) “Twisted Economics of Ethanol,” The Wall Street Journal, 6 January 2007, p. B14.


Darlene Sinclair said...

Love reading your posts. Thanks.

RB said...

Thank you!. I also want to thank you for your extended comment on my April 29th post, "what do you do when the lord is wrong?" It not only was one of those comments that really add and improve upon the post, it was much better than the original post!

You have a lot a wisdom. This is especially amazing given your youthful age.

Be blessed!